Placing

RNS Number : 1723A

Asian Plantations Limited

27 January 2011

 



27 January 2011

Asian Plantations Limited

("APL" or the "Company")

Placing

Proposed Employee Share Option Scheme

Asian Plantations Limited (LSE: PALM), a palm oil plantation company with operations in Malaysia, is pleased to announce that, subject to Shareholder approval, the Company has conditionally raised approximately £16.0 million, before expenses, through the proposed issue of 7,272,728 new Ordinary Shares at a price of 220 pence per share to new and existing investors.

The net proceeds of the Placing, amounting to approximately £15.4 million, will enable the Company to pursue further acquisitions consistent with the Company's previously stated strategy, to achieve a land resource of titled, Malaysian agricultural land in excess of 20,000 hectares by the end of 2011, and provide the working capital necessary for the Company to continue to develop its existing assets further.

Due to the size of the Placing relative to the Company's existing authorities to allot shares generally and specifically free of pre-emption rights, the Placing is conditional, inter alia, upon the passing of certain resolutions relating to the Placing ("Placing Resolutions") by the Shareholders at the Extraordinary General Meeting. The Company is also seeking, for the reasons set out below, the authority to adopt and implement the Company Share Option Scheme.

For the purposes of this announcement, all defined terms will carry the same meaning as those set out in the circular ("Circular") to be posted to Shareholders shortly in connection with the Placing and which will shortly be available on the Company's website, www.asianplantations.com.

Current trading and background

Since the admission of the Company's Ordinary Shares to trading on AIM in November 2009, the Board has continued to work towards the Company's stated strategy of owning in excess of 20,000 hectares of Malaysian titled land within two years of its listing on AIM.

On 15 December 2009, the Company announced the acquisition of the entire issued share capital of Jubilant Paradise Sdn Bhd and Incosetia Sdn Bhd, which, together, own a partly developed palm oil plantation totalling approximately 5,850 hectares in Sarawak, Malaysia, for a total consideration of RM68 million (circa. £14.0 million).  The consideration was funded as to RM55 million (circa. £11.4 million) from a debt facility provided by a local Malaysian bank and RM13 million (circa. £2.7 million) from the £5.2 million of new equity capital raised at the time of the Company's admission to trading on AIM.

On 16 August 2010, the Company announced a Company-sponsored institutional placing raising £4.25 million, gross of expenses, and the acquisition of the entire issued share capital of Fortune Plantation Sdn Bhd, a company owning a partly developed palm oil plantation totalling approximately 5,000 hectares in Sarawak, Malaysia, for a total consideration RM38.7 million (circa. £8.0 million).  The consideration was funded with RM24.7 million (circa. £5.1 million) from a nine year debt facility, provided by a local Malaysian bank, and RM13.9 million (circa. £2.9 million) from the net proceeds of the fundraise.

Alongside the development of its planting programme, the Company has been continuing its community outreach programme and has recently entered into a memorandum of understanding with local villages to implement a pioneering community development initiative.  The initiative, which includes the incorporation of a joint venture company owned by both the village co-operative and the Company, aims to assist local indigenous communities with the development of 500 acres (to be extended up to 2,000 acres) of their land for cash crop agriculture, which is often inhibited by their lack of access to the required capital, with plantings scheduled to commence in Q1 2012.

Details of the Placing

Panmure Gordon, as placing agent for the Company, has conditionally placed 7,272,728 Placing Shares with institutional and other investors at the Placing Price to raise gross proceeds of approximately £16.0 million, before total costs of approximately £630,000.

The Placing Shares will, on Admission, be credited as fully paid and rank pari passu in all respects with the Existing Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid on the Ordinary Shares after that date.

The Placing Shares represent approximately 21.75 per cent. of the Existing Ordinary Shares and 17.86 per cent. of the Enlarged Share Capital.

Application will be made by Strand Hanson to the London Stock Exchange for the Placing Shares to be admitted to trading on AIM. It is expected that, conditional upon the passing of the Placing Resolutions at the EGM, dealings in the Placing Shares will commence on 28 February 2011.

Use of Placing proceeds and debt financing

In order to meet APL's objective of consolidating in excess of 20,000 hectares of Malaysian titled land, the Board is considering the further acquisition of three potential targets, with Malaysian land parcels totalling in excess of 12,000 hectares of titled land, which are considered by the Board to be highly complementary to the Company's existing land assets.  The Directors anticipate making such acquisitions of underdeveloped land at a price of circa. RM 3,000 (US$ 982.5) per acre.

It is the Company's intention, subject to having the available financial resources, to seek to complete the acquisition of at least two of these targets by Q3 2011, using the net proceeds of the Placing.  In the event that these acquisitions do not complete, it is the intention of the Board to continue to source attractive acquisition opportunities for the Company, in order to meet the ongoing strategic objective to own in excess of 20,000 hectares of Malaysian titled land.

In addition to the expansion and development of its land bank, the Company intends, as previously announced, to implement an increase in the capacity of its milling plans, from gross potential output from 90 tonnes per hour to 120 tonnes per hour, based on the current land resource owned by the Company and third party crops in the area.  The Company's mill is expected to be operational in 2012 and will utilise advanced vertical sterilizer technology with methane recapture.

Since admission to AIM, APL has continued to execute an aggressive planting programme, with the Company remaining on track to complete the planting of its first estate, BJ Corporation, by the end of 2011.  The abovementioned acquisitions provide important additional scale to the Company's operations and are expected, if acquired, to be fully planted by 2014. 

All planting targets are subject to the availability of the required working capital and, accordingly, the Company is seeking to secure sufficient sources of finance from both the debt and equity markets.  To this end, the Board has, as announced on 14 January 2011, appointed CIMB Investment Bank Berhad to arrange a medium term note programme for the Company which, if fully subscribed, should raise up to RM250 million (circa. £51.6 million).  Certain of the above mentioned targets will be dependent on the successful completion of this debt financing, in addition to the Placing.

The Company Share Option Scheme

In order for the Company to be able to retain qualified and experienced key personnel and recruit new personnel with the necessary capabilities and high performance standards, which the Directors believe to be essential for the Company to be effective and profitable, the Company intends to adopt the Company Share Option Scheme.  The Scheme will give the Company added flexibility in structuring more competitive remuneration packages, which are designed to reward and retain personnel whose services are vital to the well-being, growth and success of the Company.

The aggregate amount of Ordinary Shares over which the Committee may grant Options on any date, when added to the amount of Ordinary Shares issued and issuable in respect of all Options granted under the Scheme, shall not exceed 10 per cent. of the issued share capital of the Company (on a fully diluted basis) on the day preceding the Date of Grant.

If granted, the Initial Options shall entitle the Participants, on a cumulative basis, to subscribe for up to 3,568,000 Ordinary Shares, representing 8.76 per cent. of the Enlarged Share Capital of the Company.

A summary of the Company Share Option Scheme, including the Subscription Price and relevant performance hurdles, is included in the Circular.

Extraordinary General Meeting

The Extraordinary General Meeting of the Company is to be held at The American Club at 10 Claymore Hill, Singapore, 229573 at 11.00 a.m. (Singapore time) on 22 February 2011 for the purpose of seeking Shareholders' approval for the Placing Resolutions and the resolution to be proposed in respect of the Company Share Option Scheme ("Scheme Resolution").

Recommendation

For the reasons set out above, the Board considers that the Placing Resolutions will promote the success of the Company for the benefit of its Shareholders as a whole.

Accordingly, the Board has unanimously recommended that Shareholders vote in favour of the Placing Resolutions, as set out in the Circular, as they intend so to do in respect of their own beneficial holdings (which amount in aggregate to 6,228,002 Ordinary Shares, representing approximately 18.62 per cent. of the Existing Ordinary Shares).

In respect of the Placing Resolutions, the Company has received irrevocable undertakings from certain Shareholders representing, in aggregate, 20,649,000 Existing Ordinary Shares, being approximately 61.74 per cent. of the Company's issued share capital, that they will exercise or procure the exercise of, in person or by proxy, all of the voting rights attached to their holdings of Ordinary Shares at the date of the EGM in favour of such resolutions.

In respect of the Scheme Resolution, the Company has received irrevocable undertakings from the certain Shareholders representing, in aggregate, 14,421,000 Existing Ordinary Shares, being approximately 43.12 per cent. of the Company's issued share capital, that they will exercise or procure the exercise of, in person or by proxy, all of the voting rights attached to their holdings of Ordinary Shares at the date of the EGM in favour of such resolution.

Expected timetable of principal events

Publication of the Circular	27 January 2011
Latest time and date for receipt of Forms of Instruction in respect of the EGM	11.00 a.m. on 19 February 2011
Latest time and date for receipt of Forms of Proxy in respect of the EGM	11.00 a.m. on 20 February 2011
Extraordinary General Meeting	11.00 a.m. on 22 February 2011
Admission of Placing Shares to trading on AIM	28 February 2011

All references to times of day in this announcement are to Singapore time unless otherwise stated.

Dennis Melka, APL's Joint Chief Executive Officer, commenting on the Placing, said:

"We are delighted to have received such significant demand for the Placing from new institutional shareholders. The new funds raised further strengthen APL, as it continues its strategy of consolidating scarce agriculturally-titled land parcels in Malaysia, and is an important step towards achieving the Company's stated objective of owning in excess of 20,000 hectares of Malaysian titled land within two years of listing."

For further information contact:

Asian Plantations Limited Dennis Melka, Joint Chief Executive Officer Graeme Brown, Joint Chief Executive Officer	Tel:  [phone]
Strand Hanson Limited James Harris Paul Cocker Liam Buswell	Tel: [phone]
Panmure Gordon (UK) Limited Tom Nicholson Edward Farmer	Tel: [phone]
Bankside Consultants Simon Rothschild Louise Mason	Tel: [phone] Tel: [phone]

 

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