TDM proposes to acquire control of Terengganu’s Ladang Rakyat

PETALING JAYA: TDM Bhd yesterday entered into a heads of agreement (HoA) with Terengganu Incorporated Sdn Bhd (Terengganu Inc) to acquire the latter’s entire 42.64% stake in Ladang Rakyat in a related party deal for a price yet to determined.

Terengganu Inc is a major shareholder in TDM, with a 61.15% stake as at Feb 15, 2017.
The proposed acquisition will increase TDM’s current shareholdings in Ladang Rakyat from 19.12% (held via its subsidiary) to 61.76%.
Ladang Rakyat has a planted oil palm plantation area of 11,467ha in Terengganu with an average tree age profile of nine years.
Currently, TDM’s planted oil palm area stands at 44,493ha, consisting of 31,848ha in Terengganu and 12,645ha in Kalimantan, Indonesia. The acquisition will boost TDM’s total planted oil palm area in Terengganu alone from 31,848ha to 43,315ha.

This move will also bring down the average age profile of TDM’s oil palm trees in Terengganu by 1.5 years, from 15.4 years to 13.9 years and this is expected to improve production yields moving forward.
The purchase consideration of the stake is to be based on an independent valuation to be done by a firm appointed by TDM and TDM’s satisfaction of the legal, operational and financial due diligence findings prior to the execution of a definitive share sale agreement (SSA).
Terengganu Inc was set up to streamline the state government’s business activities and to strengthen the financial performance and commercial competitiveness of Terengganu’s key sectors via strategic investments.
Ladang Rakyat was incorporated to concentrate on oil palm plantations within Terengganu. The primary business focus of the company is in the cultivation of oil palm, processing of fresh fruit bunches and trading of crude palm oil and palm kernel.
Ladang Rakyat reported revenue, profit after tax and minority interest and net assets attributable to owners of the company of RM194.3 million, RM4.1 million and RM163.7 million respectively for the financial year ended Dec 31, 2015.
The proposed acquisition will be conditional upon, among others, approvals being obtained from the shareholders of TDM, Terengganu Inc, Ladang Rakyat and the authorities. An SSA is to be signed within six months from the date of the HoA.