MSM shareholders approves disposal of MSM Perlis to FGV’s unit for RM175 mil

By TMR / Pic by TMR FILE PIX

MSM Malaysia Holdings Bhd’s shareholders have approved the disposal of the entire equity interest in MSM Perlis Sdn Bhd (MSM Perlis), a wholly-owned subsidiary of MSM to FGV Integrated Farming Holdings Sdn Bhd (FGVIF) for an initial disposal consideration of RM 175 million in cash.

The disposal comprises 11 parcels of agricultural and industrial land, subject to adjustment for net working capital and net debt at completion of the proposed disposal, the company said in a statement today.

The disposal of the entire equity interest in MSM Perlis is estimated to result in a gain of RM 91.6 million after completion.

The approval in view of the Share Sales Agreement (SSA) that was entered between both parties in June 2021, is part of MSM’s turnaround strategy to divest its non-core assets towards optimising the Group’s operational assets and strengthen its capital expenditure.

The entire plantation sector in MSM Perlis has ceased operation since 15 September 2019 due to the high operating cost for maintenance that resulted in unsustainable financial commitment.

Meanwhile, its refinery operation was discontinued on 30 June 2020, following the Group’s operation rationalisation strategies to consolidate the production capacity to the new refinery, MSM Sugar Refinery (Johor) Sdn Bhd (MSM Johor).

The discontinuation of MSM’s non-strategic operations was mutually deliberated by the Board of Directors of MSM after taking into consideration cash flow adjustment and other operational determinants towards ensuring sustainable growth in delivering fair and reasonable value to the shareholders.

MSM continued to record profitable performance for 1H 2021 with Profit Before Tax (PBT) of RM 64.55 million against Loss Before Tax (LBT) of RM 52.52 million in the corresponding period last year, backed by the improved margin and capacity utilisation as well as lower finance cost. The increase in average selling price in the wholesale segment and premiums for Industry and Export refined sugar segments have resulted in the Group’s revenue higher at RM 1.07 billion compared to RM 959.58 million in 1H 2020.