Monday 27 May 2024
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KUALA LUMPUR (Oct 30): The Federal Land Development Authority (Felda) intends to buy over FGV Holdings Bhd’s palm oil mills, following the termination of the land lease agreement (LLA) between the two parties.

At a briefing today, Tan Sri Abdul Wahid Omar, who heads the special task force set up to address issues at Felda, said the agency will also take over FGV’s palm oil mills scattered nationwide.

However, he did not disclose how much Felda will be paying for the mills nor the amount of compensation to be paid to FGV for the early termination of the 99-year LLA beginning from Nov 1, 2011.

Given the latest developments, it seems that FGV will be left with roughly 67,000 of plantation land without any mills and a large cash pile with the compensation and the divestment. 

The group has a total landbank of 417,147ha in Malaysia, of which 350,733ha or 84% of the lands are under the LLA. FGV also has 22,578ha of land in Indonesia.

According to FGV’s website, the group has 68 mills across Malaysia, processing over 14 million metric tonnes (MT) of fresh fruit bunches (FFB) annually, whereby two-thirds of the FFB are sourced from Felda settlers and independent smallholders.

The group’s 33 mills are Roundtable on Sustainable Palm Oil (RSPO) approved, while all 68 are Malaysian Sustainable Palm Oil (MSPO) certified. And eight mills are certified by the International Sustainability and Carbon Certification (ISCC).

Being a public-listed company, FGV, in which Felda holds a 33.66% stake, will need to get the approval of its shareholders for potential disposal of its palm oil mills, and by virtue of Felda being a related party, the latter would not be able to vote on the proposal.

The proposed acquisition of FGV’s mills came after the announcement on Wednesday of the Cabinet’s approval for the termination of the LLA as part of a restructuring exercise at Felda.

Yesterday, FGV said it will start the process of terminating the LLA with Felda once it receives an official notice from the latter on the matter, adding that the compensation due could be between RM3.5 billion and RM4.3 billion.

However, it said it had yet to receive a written notice from Felda regarding the termination of the LLA.

As at 3.45pm, FGV fell one sen or 0.93% to RM1.07, giving a market capitalisation of RM3.9 billion.

Edited ByKathy Fong
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