R.E.A.Hldgs PLC Statement re investment in REA Kaltim, replacement (4858Y)
17 May 2016 - 8:41PM
UK Regulatory
TIDMRE.
RNS Number : 4858Y
R.E.A.Hldgs PLC
17 May 2016
R.E.A. Holdings plc ("REA", or the "company")
Third party investment in PT REA Kaltim Plantations
Correction to gross assets of REA Kaltim and its subsidiaries
from US$853.5 million to US$577.8
REA is pleased to announce that it has reached a conditional
agreement with PT Dharma Satya Nusantara Tbk ("DSN") pursuant to
which it is proposed that PT Swakarsa Sinarsentosa, ("SWA"), a
wholly owned subsidiary of DSN, will acquire a 15 per cent
investment in the company's principal operating subsidiary in
Indonesia, PT REA Kaltim Plantations ("REA Kaltim").
DSN is an Indonesian natural resources company listed on the
Indonesia Stock Exchange in Jakarta and engaged in the business of
oil palm plantations and wood products. DSN's plantation estates
are based in East, Central and West Kalimantan, with the majority
of the oil palm estates in East Kalimantan located close to REA
Kaltim's estates.
REA stated in its 2015 annual report, published on 25 April
2016, that it was in active discussions with a limited short list
of interested parties primarily directed at securing a strategic
third party investment in REA Kaltim. The directors believe that
the proposed investment by, and joint venture with, SWA will bring
significant mutual benefits in terms of opportunities for more
efficient sourcing of supplies, for marketing and through exchanges
of information on agronomic practices. Further, the proposal is in
line with the directors' long-held intention to increase Indonesian
participation in the ownership of the group's agricultural
operations and will also serve to secure more permanent capital in
the local operations of the REA group.
Under the terms of the conditional agreement (the "Master
Agreement"), it is proposed that SWA will:
1. acquire 650 outstanding class B shares in the capital of REA
Kaltim, representing 5 per cent of the current issued share
capital, and subscribe a further 1,530 class B shares in the
capital of REA Kaltim, so as to bring its total shareholding in REA
Kaltim to 2,180 shares, representing 15 per cent of the enlarged
issued share capital of REA Kaltim; and
2. provide loans to REA Kaltim and its subsidiaries in amounts
equal to 15/85ths of the aggregate principal amounts borrowed by
REA Kaltim and its subsidiaries from REA and its wholly owned
subsidiary, R.E.A. Services Limited ("REAS").
The effect of these proposals will result in SWA holding in
total 15 per cent of the enlarged issued share capital of REA
Kaltim and 15 per cent of the enlarged aggregate principal amount
of shareholder loans to REA Kaltim and its subsidiaries. The
proceeds of the transaction will be utilised, inter alia, for the
repayment of debt, advancing to subsidiaries and working
capital.
The consideration for the shares to be purchased, and the
subscription price per share, will depend on the aggregate number
of hectares planted by REA Kaltim and its subsidiaries, as well as
on REA Kaltim's net current assets and total borrowings from REA
and REAS, as at the close of business on 30 June 2016 and is
expected to amount to some US$16.8 million. The aggregate amount to
be lent by SWA to REA Kaltim and its subsidiaries is expected to
amount to the equivalent of some US$33.0 million.
Subject to satisfactory operational, financial and legal due
diligence, to the agreement and execution of the necessary formal
documentation and to the receipt of all necessary corporate and
regulatory approvals, it is intended that the above arrangements
will complete on or before 31 October 2016. Meanwhile, it is
proposed that SWA will advance some 90 per cent of the aggregate
purchase and subscription consideration to REA Kaltim on 31 August
2016 (as respects the purchase consideration, upon terms that REA
Kaltim will account for the consideration to the subsidiary of the
company selling the shares to be acquired by SWA).
In addition, DSN has agreed unconditionally that it will, on or
before 10 June 2016, lend to REA Kaltim the sum of US$10 million by
way of a pre completion advance. The pre completion advance will be
repayable on completion of the proposed investment (in which event
it will be set off against the monies otherwise due to be lent by
SWA), or otherwise in the event that the Master Agreement fails to
become unconditional.
REA Kaltim currently has in issue a total of 13,000 shares,
comprising 12,350 class A shares and 650 class B shares. Gross
assets of REA Kaltim and its subsidiaries, as included in the
consolidated REA group financial statements as at 31 December 2015,
amounted to US$577.8 million and the profit before tax attributable
to REA Kaltim and its subsidiaries, as included in those financial
statements for the year ended 31 December 2015, amounted to US$4.2
million.
The parties have acknowledged the intention of DSN to increase
its participation in REA Kaltim to an eventual level of 49 per cent
by gradual stages over a period of five years, but on the basis
that each increase will be subject to agreement of the price and
other terms at the time of that increase and to the receipt of all
necessary consents and approvals, including the approval of REA
shareholders to the extent required.
REA will provide an update on progress regarding the proposal in
due course.
Rothschild is acting as financial adviser to REA.
Enquiries
REA: +44 (0)207 436 7877
Camarco (PR): Jennifer Renwick + 44 (0)203 757 4994
This information is provided by RNS
The company news service from the London Stock Exchange
END
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