KUALA LUMPUR (March 19): The outcome of the arbitration initiated by Federal Land Authority's (Felda's) unit FIC Properties Sdn Bhd (FICP) against the Rajawali Group, to exercise the put option to sell its 37% stake in PT Eagle High Plantations Tbk back to the Indonesian company for US$678.09 million is expected to be out soon.
Deputy Prime Minister Datuk Seri Ahmad Zahid said the two-day arbitration hearing against Rajawali at the Singapore International Arbitration Centre (SIAC) was completed on Dec 5 and 6 last year.
"The arbitration's outcome is expected in the near future," Zahid said in a written parliamentary reply to Radzi Jidin (PN-Putrajaya) on Tuesday.
Felda purchased the 37% stake in Eagle High from Rajawali via FICP back in 2015 for US$505.4 million (around RM2.2 billion), or 580 Indonesian rupiah per share. The acquisition drew heavy criticism, as the price was at a 95.86% premium to Eagle High's market value at the time.
FICP, who had to take up a RM2.5 billion financing facility from Govco Holdings Bhd — a unit of Minister of Finance Inc — to afford the acquisition, defaulted on the loan's repayment in 2017.
Eagle High is majority-owned by Rajawali, which is controlled by tycoon Tan Sri Peter Sondakh, a known associate of Malaysia's former prime minister Datuk Seri Najib Razak.
FICP issued its first put option notice on January 11, 2019, citing Eagle High's failure to meet the terms of the sale agreement, in particular securing the Roundtable on Sustainable Palm Oil (RSPO) certification for Eagle High within the stipulated 30-month period.
However, Rajawali disputed this and initiated arbitration proceedings to block Felda from exercising the option.
The outcome of that arbitration favoured Eagle High, but no details were disclosed. Felda then made a second attempt to exercise the option on May 11, 2022, which Rajawali again disputed.
The outcome of the first arbitration and Felda's second attempt to exercise the same option were only revealed when the Malaysian government made a surprise announcement in February 2023 that Felda had initiated fresh arbitration against the Rajawali group.
Two weeks ago, the Auditor General's Report on Federal Agencies for 2022 raised concerns about Felda’s loan repayment commitments, as the government agency has loans totalling RM7.97 billion obtained from financial institutions and RM686 million from the federal government. These included the RM2.5 billion financing facility FICP took up to buy the Eagle High stake.
The authorities, meanwhile, are still investigating a police report filed by Felda in 2019 against the parties involved in the Eagle High investment, Zahid said.
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