KUALA LUMPUR (March 23): TDM Bhd has accepted an offer by Ikhasas Sdn Bhd for the sale of PT Rafi Kamajaya Abadi (RKA) and PT Sawit Rezki Abadi (SRA) for RM115 million, which will be conditional upon TDM meeting several agreed upon conditions, including that certain operational issues at the target companies are resolved.

In a filing with the bourse, the group said that it accepted the offer on March 21 for Ikhasas to acquire 93.75% and 95% equity interests in RKA and SRA respectively from TDM, as well as the remaining minority shares held by an individual named Andri in the two companies.

"The specific conditions include certain conditions that TDM and the disposal companies have to resolve and to provide evidence that certain specific operational issues involving the disposal companies, inter-company transactions between the disposal companies, its directors and TDM and the settlement of certain lawsuits filed by third parties against RKA, are resolved within the specific conditions period," said the group.

The disposals are also conditional upon the results of the due diligence to be conducted by Ikhasas and adjustments to be made if there are adverse findings during the due diligence.

TDM and the disposal companies also need to assess and agree upon the total costs required to resolve all specific conditions, with the purchaser bearing costs up to RM15 million. Both parties will renegotiate if the costs exceed RM15 million, it said.

It said RKA and SRA were incorporated in 2007 and 2011, respectively, under the laws of the Republic of Indonesia with principal activities in cultivation of oil palm, trading of palm oil and other related products.

RKA has been loss-making since its first year of production, while SRA has not commenced any operations since its acquisition by the group in 2015. Both companies are not expected to be profitable in the near term, the group said, adding that it has been impairing its Indonesian assets since its financial year ended Dec 31, 2017 (FY17), amounting to RM729 million.

The Indonesian subsidiaries of the group have also been classified as assets held for sale since FY19, it said.

"The offer made by Ikhasas, a Malaysian private limited company with principal activities involving investment in the palm oil business and trading and exporting of palm products, for the assets will allow TDM to consolidate its business activities and refocus its energy and resources on viable ventures more effectively without the need to be dragged by legacy issues," said TDM.

At the time of writing, TDM fell one sen or 3.5% to 27.5 sen, which translates into a market capitalisation of RM473.79 million.