KUALA LUMPUR (Oct 5): Lembaga Tabung Angkatan Tentera (LTAT) is planning to buy out Boustead Plantations Bhd (BPlant) at an offer price of RM1.55 per share.

This comes immediately after the proposed disposal of a 33% stake in BPlant by LTAT and Boustead Holdings Bhd (Boustead) to Kuala Lumpur Kepong Bhd (KLK) fell through.

“Following this termination, LTAT wishes to also announce that it aims to proceed with the general offer of BPlant at an offer price of RM1.55 per share, subject to regulatory approvals,” LTAT said in a statement on Wednesday.

At an offer price of RM1.55 per share, it represents a premium of 22% over BPlant’s last traded price of RM1.27 on Tuesday.

LTAT and Boustead hold a total of 68% in BPlant. It is worth noting that LTAT took Boustead private earlier this year.

A back-of-the-envelope calculation shows that LTAT would have to fork out RM1.11 billion for the remaining 716.8 million shares, equivalent to 32% interest, it does not own.

LTAT added in the statement that as majority shareholders, together with Boustead, of BPlant, they will refocus efforts on the restructuring of the company to ensure it gets back on a stronger financial footing and charts a better business horizon moving forward.

It also said that the move will allow BPlant to retain agility and independence in charting its own course to ensure a sustainable future.

“We are committed at addressing all the legacy issues within the Boustead Group, in line with the Strategic Plan 2023-2025 (MAMPAN25). For LTAT to discharge its duty, per the mandate and function of a sustainable pension fund, it is vital for the legacy issues to be addressed first.

“We remain confident that the restructuring of the Boustead Group will significantly improve LTAT’s position, particularly since almost 50% of our investment remains unlocked within the Group,” said LTAT chief executive officer Datuk Nazim Rahman.

Meanwhile, BPlant and KLK also announced news of the failed deal in separate filings, confirming the report by The Edge on Tuesday.

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, 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 Boustead’s debt, which totalled RM6.76 billion at end-March.

This comprised long-term borrowings of RM2.778 billion and short-term borrowings of RM3.986 billion, 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, Prime Minister Datuk Seri Anwar Ibrahim said the Ministry of Finance had 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%.