TIDMPALM
RNS Number : 9595M
Asian Plantations Limited
25 August 2011
25 August 2011
Asian Plantations Limited
("APL" or the "Company")
Proposed Acquisition
Asian Plantations Limited (LSE: PALM), a palm oil plantation
company with operations in Malaysia, is pleased to announce that it
has entered into a conditional agreement to acquire 5,000 hectares
of semi-developed plantation land (the "Dulit Estate") in Sarawak,
Malaysia (the "Proposed Acquisition"). The Dulit Estate, which
shares a common border with the Company's Incosetia Estate, is
comprised of a planted area of 2,543 hectares with palms which are
approximately 3 to 5 years old and are harvested daily, with the
remainder unplanted. It is expected that the Dulit Estate will
produce in excess of 22,000 tonnes of fresh fruit bunches ("FFB")
in 2012, with a current market sale value in excess of RM 14.3
million (US$4.8 million).
The total maximum consideration for the Proposed Acquisition,
which is subject to, inter alia, certain regulatory conditions and
potential purchase price adjustments, is RM 102.0 million (US$34.4
million), of which RM 2.0 million (US$0.7 million) has been set
aside for community and social investments, as part of the
Company's ongoing efforts to ensure social inclusion consistent
with its eventual objective of official RSPO certification. The
remaining RM 100 million (US$33.7 million) is payable in three
tranches:
-- a refundable deposit of RM 0.5 million (US$0.2 million),
which has been paid;
-- RM 89.5 million (US$30.1 million), payable in cash at the
time of completion; and
-- a further sum of up to RM 10.0 million (US$3.4 million),
payable subject to a third party verification of the unplanted
area.
Assuming a conservative market value of approximately RM 9,000
(c. US$3,000) per hectare for the unplanted land in the Dulit
Estate, the purchase price per planted hectare is approximately RM
31,400 (US$10,600), which the board of APL (the "Board") believes
represents a substantial discount to recently transacted, planted
parcels in the East Malaysian market.
The consideration is to be funded with RM 71.4 million (US$24.1
million) from a new acquisition debt facility, for which the
Company has received an offer letter and will be provided by a
local bank in Malaysia (the "Proposed Bank Facility"). As was the
case with the Company's two preceding acquisitions, the Proposed
Bank Facility will be interest-only for the first three years and
have a nine year maturity.
The remainder of the consideration, being RM 30.6 million
(US$10.3 million), will be funded from the Company's existing cash
balance, which was enhanced by the GBP16.0 million (US$25.7
million) equity placing undertaken in February 2011 and the US$2.1
million convertible bond issuance announced by the Company on 17
August 2011.
The transaction is expected to close by year-end 2011, subject
to certain regulatory approvals and the completion of the Proposed
Bank Facility.
The Board intends to commence nursery operations at the Dulit
Estate in January 2012, thereby enabling in-the-ground planting to
begin in the 4(th) quarter of 2012. The Company expects, subject to
the availability of sufficient working capital, to fully complete
all the in-the-ground planting by the 1(st) quarter of 2014.
The Board believes that the Proposed Acquisition offers numerous
strategic benefits to the Company, including:
-- increasing the scale of the Company's existing operations to
approximately 20,645 hectares of plantation land, which achieves
the Company's stated objective, made at the time of its admission
to trading on AIM on 30 November 2009 ("Admission") of exceeding
20,000 hectares within two years of Admission. Importantly, all of
the Company's land resource is within close proximity and can be
efficiently serviced by one central processing mill;
-- an immediate boost to short term revenues which complements
the existing revenue stream from the planted fields at the
Incosetia Estate and revenues expected from the BJ Estate in the
4(th) quarter of this year. At closing of the Proposed Acquisition,
three of the Company's four estates will be revenue producing;
and
-- providing the Company with further scale to supply its
planned FFB crushing mill currently under development. The mill is
expected to open in the 4(th) quarter of 2012 with an initial
capacity of 60 tonnes per hour ("TPH") but is rapidly upgradeable,
with minimal further capital expenditures, to 120 TPH in 2014 when
the Company's FFB volumes justify the milling expansion. A larger
milling operation enables improved economies of scale and allows
for better competitive positioning for the processing of third
party crop. The principal regulatory approvals required for the
construction of the Company's mill were received from the Ministry
of Land Development on 10 August 2011.
Graeme Brown, APL's Joint Chief Executive Officer, commenting on
the Proposed Acquisition, said:
"The acquisition of the Dulit Estate is a milestone development
for the Company and our field development team, as we have
successfully achieved the Company's stated objective of owning in
excess of 20,000 hectares within two years of Admission.
"We are currently updating our planting schedules but are
confident that the remainder of the Dulit Estate can be fully
planted by the 1(st) quarter of 2014. The Proposed Acquisition,
together with our existing assets, should mean the Company has over
10,000 hectares of planted land by year-end 2011; this represents
over 1.35 million palm trees, with a 30 year life span, planted in
the ground and growing. During the course of 2012, we expect to
open our vertical sterilizer mill which will be amongst the largest
mill platforms in Malaysia and maintain the momentum in our field
planting programme."
Dennis Melka, APL's Joint Chief Executive Officer, added:
"We are excited to have secured this additional parcel of land,
which has tremendous operational synergies with our existing estate
operations and which are located in close proximity to one another.
Through our long standing local relationships and on-the-ground
presence, we were able to secure the parcel in a negotiated,
non-competitive situation, which demonstrates our continued ability
to source acquisition opportunities for the Company, as well as
securing attractive local currency bank financing, which we believe
creates long term shareholder value.
"Due to the Company's significantly enhanced operating platform
and recently strengthened balance sheet, we are well-positioned to
consolidate the remaining land resource in our operating area. We
believe that the Company now has, subject to the availability of
sufficient growth capital, the potential to grow to in excess of
45,000 hectares by the end of 2012. We look forward to updating our
shareholders with further positive developments in the weeks and
months ahead."
For further information contact:
Asian Plantations Limited Tel: +65 6325 0970
Dennis Melka, Joint Chief Executive
Officer
Graeme Brown, Joint Chief Executive
Officer
Strand Hanson Limited Tel: +44 (0) 20 7409 3494
James Harris
Paul Cocker
Liam Buswell
Panmure Gordon (UK) Limited Tel: +65 6824 8204
Tom Nicholson Tel: +44 (0) 20 7459 3600
Callum Stewart
Bankside Consultants Tel: +44 (0) 20 7367 8871
Simon Rothschild
This information is provided by RNS
The company news service from the London Stock Exchange
END
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