KUALA LUMPUR (June 27): An arbitral tribunal has ruled in favour of Felda-owned FIC Properties Sdn Bhd (FICP) in the company's second attempt to exercise the put option to sell its 37% stake in PT Eagle High Plantations Tbk back to the Rajawali Group, Deputy Prime Minister Datuk Seri Ahmad Zahid said on Thursday.
The tribunal, in its ruling on June 14, ordered either PT Rajawali Capital International or PT Rajawali Capital, or both of them, to fulfill their obligations under the put option by repurchasing the Eagle High Plantation shares at an agreed price set by FICP.
"However, in order to comply with the Singapore International Arbitration Centre (SIAC) regulations and uphold FICP's responsibilities, further details cannot be provided at this time," Zahid said in a written parliamentary reply to Radzi Jidin (Perikatan Nasional-Putrajaya).
The put option was part of the share sale agreement between FICP and Rajawali when FICP acquired the 37% stake back in 2015 for US$505.4 million (RM2.2 billion), or 580 Indonesian rupiah per share. This acquisition faced criticism due to the premium price, which was 95.86% higher than Eagle High's market value at the time.
FICP, which had to take up a RM2.5 billion financing facility from Govco Holdings Bhd — a unit of Minister of Finance Inc — to finance the acquisition, defaulted on the loan's repayment in 2017.
Eagle High is majority-owned by Rajawali, which is controlled by Indonesian tycoon Tan Sri Peter Sondakh, a known associate of former prime minister Datuk Seri Najib Razak.
FICP issued its first put option notice in January 2019, citing Eagle High's failure to meet the terms of the sale agreement, particularly in securing Roundtable on Sustainable Palm Oil (RSPO) certification for Eagle High within the stipulated 30-month period.
Minister in the Prime Minister’s Department (Law and Institutional Reform) Datuk Seri Azalina Othman Said, in a written parliamentary reply in February last year, said either PT Rajawali Capital International or PT Rajawali Capital was supposed to pay FICP US$678.09 million to buy back the stake.
However, Rajawali disputed this and initiated arbitration proceedings to prevent Felda from exercising the option, with the outcome favouring Eagle High.
Felda then attempted a second exercise of the option in May 2022, which Rajawali again disputed.
"Felda and FICP consistently assert the validity of the put option rights, and we are pleased that the tribunal has definitively upheld this position in the published award," Zahid said, noting that Felda is currently exploring options to acknowledge and implement the award.
Zahid added that Felda has not recorded any profit or dividend earnings from its investment in the 37% shares of Eagle High Plantations.