Acquisition

RNS Number : 1374E
Asian Plantations Limited
15 December 2009
 




Asian Plantations Limited

("APL" or the "Company")


Acquisition



Asian Plantations Limited (LSE: PALM), a palm oil plantation company with operations in Malaysia, which was admitted to trading on AIM in November 2009, is pleased to announce that it has entered into a conditional agreement to acquire the entire issued share capital of Jubilant Paradise Sdn Bhd ("Jubilant") and Incosetia Sdn Bhd ("Incosetia") (the "Jubilant Group"), which owns a partly developed palm oil plantation totalling approximately 5,850 hectares in Sarawak, Malaysia (the "Incosetia Estate") (the "Proposed Acquisition").  


The total consideration for the Proposed Acquisition, which is subject to certain conditions including receipt of regulatory approvals, is RM68 million (circa. £12.4 million), payable in three tranches. An initial tranche of RM14.3 million (£2.6 million) is payable immediately, with a further tranche of RM 7.3 million (£1.3 million) to be paid by 30 December 2009, and the balance payable on completion, which is expected to take place no later than 31 January 2010. In the event that any of the conditions referred to above, each of which are customary for a transaction of this nature, are not met and the Proposed Acquisition does not complete, the Company will be entitled to seek full recourse in respect of all previous consideration paid. The total purchase price per hectare is approximately RM11,600 (circa. £2,116). The consideration is to be funded as to RM55 million (circa. £10 million) from a new debt facility, provided by a local bank in Malaysia, and RM13 million (circa. £2.4 million) from the £5.2 million of new equity capital raised at the time of the Company's admission to trading on AIM in November 2009. The Proposed Acquisition will be free of the Jubilant Group's existing liabilities.


The Incosetia Estate is less than five kilometres from APL's existing palm oil plantation and consists of 1,000 hectares of planted land, with palms of approximately three years of age. In respect of the unplanted land, nursery operations are expected to commence in the first quarter of 2010, thereby enabling in-the-ground planting on the remaining 4,850 hectares to occur within 12 months of completion of the Proposed Acquisition, subject to the availability of sufficient working capital.  


The audited accounts of Incosetia for the year ended 31 December 2008, which have been prepared under Malaysian GAAP, showed revenues of RM155,752 (circa. £28,421) and net losses of RM750,347 (circa. £136,924). Gross assets were RM48.9 million (circa. £8.92 million). Jubilant is a holding company with no significant assets, which has recently entered into an agreement to acquire Incosetia. The acquisition of Incosetia by Jubilant is conditional upon and will occur simultaneously with, the completion of the Proposed Acquisition.

  

The directors believe that the Proposed Acquisition offers numerous strategic benefits to APL, including:


  • increasing the scale of the Company's existing operations to approximately 10,635 hectares of plantation land, of which a combined 3,000 hectares is fully planted, in line with the Company's previously stated objectives of exceeding 20,000 hectares within two years of admission to trading on AIM. This planted land and the land available for further expansion provides a strong platform for future revenue generation;  
  • allowing revenue generation to take place immediately after completion of the Proposed Acquisition;
  • providing the Company with the scale to meaningfully investigate the design, planning and approval for a next-generation vertical sterilizer milling system, which generally requires fresh fruit bunch output from at least 10,000 hectares of planted land for maximum profitability, efficiency and sustainability; and
  • benefiting from an attractive implicit valuation of the Incosetia Estate, relative to other publicly announced land transactions in East Malaysia, at a time of increasing agricultural land scarcity in Malaysia.


After completion of the Proposed Acquisition, the Company will also immediately extend its community outreach initiative to the surrounding small villages located outside the boundaries of the Incosetia Estate. These on-going initiatives include clean water systems, employment opportunities and subsidised palm oil seedlings.


Graeme Brown, APL's Joint Chief Executive Officer, commenting on the Proposed Acquisition, said:


"We are excited to have secured this new 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 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."



For further information contact:


Asian Plantations Limited 

Dennis Melka, Joint Chief Executive Officer 

Graeme Brown, Joint Chief Executive Officer 

 


  Tel: +65 9878 4171

  Tel: +60 19 8660221

Strand Hanson Limited

James Harris

Angela Peace

Paul Cocker



Tel: +44 (0)20 7409 3494

Mirabaud Securities LLP

Rory Scott



Tel: +44 (0)20 7878 3360

Bankside Consultants

Simon Rothschild

Oliver Winters



Tel: +44 (0)20 7367 8871

Tel: +44 (0)20 7367 8874





This information is provided by RNS
The company news service from the London Stock Exchange
 
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