KUALA LUMPUR: Kuala Lumpur Kepong Bhd's (KLK) proposal is the "most financially appealling and cleanest" among those that have bid to become Boustead Holdings Bhd's strategic partner for the privatisation of Boustead Plantations Bhd (BPlant).
KLK's offer stood out due to its attractiveness in terms of value creation and price, according to the Armed Forces Fund Board (LTAT) chief executive Datuk Ahmad Nazim Abdul Rahman.
This also allows Boustead and parent LTAT the opportunity to manage and develop BPlant's two key estates.
Within BPlant, there are two significant estates. One is Malakoff in Batu Kawan, Penang and another is Balau in Semenyih, Selangor.
The move also holds significance for Boustead Properties Bhd, which is poised to benefit from the rights granted to it for the redevelopment of the two estates.
"Under this scheme, Boustead Properties is given the right to deal with these two estates. The two estates, if it is redeveloped, will boast a gross development value of about RM8 billion. Malakoff Estate currently sits within the Batu Kawan industrial zone and Balau is already surrounded by commercial and residential developments in Semenyih," Ahmad Nazim told the New Straits Times.
The privatisation attracted interest from 14 suitors but only six submitted the bid. This included IOI Corporation Bhd, YTL Corporation Bhd, Tradewinds Plantation, Samling Group, Perak State Agricultural Development and a non-plantation company, Pentamaster Corporation Bhd.
KLK's proposal emerged as the most financially appealing and operationally feasible option. "We wanted a deal that is certain, so KLK has got the cleanest deal," Ahmad Nazim said.
The deal promises to reshape the Malaysian plantation sector and create new opportunities for long-term value creation.
While the deal will result in LTAT no longer having major control over BPlant, it aligns with the fund's goals of diversifiying its portfolio by liquidating exposure in a single plantation stock.
The move will also enable LTAT to achieve its long-term portfolio rebalancing goals.
"As for Boustead, this move will help us raise the necessary funds to partially settle our RM1.4 billion borrowings by next year," he said.
BPlant has a net tangible asset of about RM1.30 and owns more than 92,000 hectares of land. However, a significant portion of these plantations requires replanting, which would require an estimated RM600 million in capital.
As such, he said KLK's involvement is expected to bring the necessary funds and operational expertise to enhance efficiency.
The whole exercise will value BPlant at more than RM3 billion. "KLK's acquisition of the majority stake in Boustead Plantations will usher in a new era for the company," Ahmad Nazim noted.
On Aug 24, KLK announced its proposal to buy 739.2 million shares in BPlant, representing 33 per cent and one share of its total issued shares from Boustead, for RM1.15 billion or RM1.55 per share.
This confirmed the report by the New Straits Times earlier on the talks of KLK buying a major stake in BPlant from Boustead and taking the firm private.
The proposed acquisition is expected to be completed by the fourth quarter of 2023.