KUALA LUMPUR (June 18): The Indonesian authority has revoked the plantation business licence (IUP) issued to TDM Bhd's Indonesian subsidiary PT Sawit Rezki Abadi (PTSRA) for its 10,000ha land located in the municipality of Melawi, West Kalimantan, which is expected to result in a financial impact amounting to RM3.5 million on the group.
In a filing with Bursa Malaysia today, TDM said PTSRA received the revocation letter on June 11 and after due deliberation and consultation with the relevant party, PTSRA informed TDM of the issue.
"The decision to revoke the IUP is made on the reason that the property has not been developed since 2015. PTSRA is currently consulting its legal counsel and in the process of making an appeal to the Bupati of Melawi," the group said.
Bupati of Melawi refers to the regent of the municipality of Melawi.
TDM said the revocation of IUP will have a financial impact of RM3.5 million at the group level, based on the net assets directly associated with PTSRA as at Dec 31, 2020.
However, TDM maintained that the amount is not material as it represents less than 0.5% of the group's total equity.
"There is no operational impact as there is no activity on this land. The operation of the other TDM Indonesian subsidiary PT Rafi Kamajaya Abadi (PTRKA) runs as usual and no adverse implication arising against it due to the revocation of PTSRA’s IUP," it said.
According to TDM, PTRKA is its main active Indonesian subsidiary and currently operates 10,727ha of oil palm planted area at Kecamatan Pinoh Utara, Kabupaten Melawi, Indonesia.
TDM shares today slid one sen or 3.85% to close at 25 sen apiece, giving the group a market capitalisation of RM422.74 million.