PETALING JAYA: KUB Malaysia has entered into a conditional sale and purchase agreement with Beradin Plantation Sdn Bhd to dispose of two oil palm estates measuring an aggregate of 2,656.16 hectares for a total cash consideration of RM158 million.
The two estates, namely the Kahang estate and the Sungai Yong estate, together with all buildings and infrastructure as well as plants and crops on them, are collectively referred to as the “Kubah estate”.
The disposal consideration represents a premium of RM2 million, or 1.3%, above the market value of the Kubah estate.
In its Bursa filing, KUB said since the market value of the Kubah estate has appreciated over the years, the disposal presents an opportunity to realise the significant gain in value and strengthen its liquidity and cash flow position.
“In addition to KUB being in a stronger cash position, the group would also be able to avoid incurring significant capital expenditure for the Kubah estate going forward as the majority of its oil palms are categorised as old and would need to be cleared and replanted in phases in the coming years,” it added.
Furthermore, KUB estimated that it would take a minimum of four years after each replanting phase before the Kubah estate is able to meaningfully contribute to the group.
“By unlocking capital resources that are tied up in long-term assets through the proposed disposal, the group would be able to reinvest the proceeds for its operations and expansion of its core businesses and investments and to pursue potential future business opportunities as and when they arise,” it said.
The proposed disposal is expected to be completed in the fourth quarter of 2020.
