KUALA LUMPUR (Oct 4): The proposed disposal of a 33% stake in Boustead Plantations Bhd (BPlant) by the Armed Forces Fund Board (LTAT) and Boustead Holdings Bhd (Boustead) to Kuala Lumpur Kepong Bhd (KLK) has fallen through.
BPlant and KLK said this in separate filings, confirming the report by The Edge on Tuesday (Oct 3).
KLK said it was informed that the condition precedent under the strategic collaboration agreement (SCA) inked between KLK, Boustead and LTAT “will not be satisfied by the cut-off date of Oct 6, 2023”.
“In the circumstances, the parties mutually agree that the SCA shall be terminated with immediate effect on Oct 4, 2023,” it said.
“As a result of the termination, Boustead shall return the deposit (equivalent to the sum of RM229.15 million) to KLK within 14 business days from Oct 4, 2023, or such other later date as may be agreed between the parties,” KLK added.
Both KLK and BPlant said the termination of the SCA is not expected to have any material effect on the earnings, earnings per share, net assets, and net assets per share of the respective companies for their current financial year.
Their shares will resume trading on Thursday (Oct 5), after two days of suspension on Tuesday and Wednesday.
To recap, the deal would have seen LTAT and Boustead dispose of a 33% stake in BPlant for RM1.15 billion or RM1.55 per share.
KLK currently holds a direct 3.09% stake in BPlant, following its last acquisition of 6.11 million shares on Sept 29.
Under the deal, KLK had planned to extend a mandatory general offer at RM1.55 a share for BPlant in order to raise its shareholding to 65%, and to subsequently delist the company. LTAT and Boustead would have held the remaining 35% upon completion of the now-defunct exercise.
The BPlant-KLK proposal came just months after LTAT took Boustead private to accelerate the restructuring of the Boustead’s debt, which totalled RM6.76 billion at end-March.
This comprised long- and short-term borrowings of RM2.778 billion and RM3.986 billion respectively, against cash of RM565.8 million.
For LTAT, improvements in Boustead will be positive to its own position, as the armed forces fund said in July that its asset allocation on Boustead-related investments stood at 39% of its portfolio. In March this year, the armed forces fund paid RM476.45 million in dividends or a rate of 5% for 2022, up from 2021’s RM379.4 million or 4.1%.
On Monday (Oct 2), Prime Minister Datuk Seri Anwar Ibrahim said the Ministry of Finance has allocated RM300 million this week to help LTAT address its liquidity issues, and is looking for a total of RM2 billion by year end to “save” LTAT. The money would help LTAT avoid losses, Anwar was quoted as saying in news reports, as he revealed the financial support at the launch of the Felda Segalanya event at Felda Chemomoi in Teriang, Pahang.
LTAT completed Boustead’s takeover on June 12, in which it paid RM702.3 million for the remaining 40.58% stake in Boustead, in a deal that valued Boustead at RM1.73 billion. Boustead had net tangible assets of RM1.60 per share at the time, against the takeover price of 85.5 sen.
Speculation of the termination of the BPlant stake sale to KLK had sent shares of BPlant down 13% to RM1.27 on Monday, giving it a market capitalisation of RM2.84 billion.
Prior to that, reports that Boustead was preparing to dispose of the plantation arm had sent BPlant shares on a steady climb from a low of 64 sen apiece since June. The counter rose to its recent closing high of RM1.52 on Aug 28, following the announcement of KLK’s acquisition proposal.
KLK shares last closed unchanged at RM21.48 on Monday, valuing the group at RM23.22 billion. According to Bloomberg data, its share price has fallen 3.94% year-to-date, but over the past one year, it is up by 9.69%.