KUALA LUMPUR (April 16): Oil palm planter and property developer Golden Land Bhd (KL:GLBHD) is disposing of two Indonesian palm oil units PT SKMA and PT SBS for RM151.5 million.

In a filing, Golden Land said it has faced persistent challenges in its palm oil plantation segment, despite efforts to expand its footprint in Indonesia with the acquisitions of 95% stakes in the two companies in 2019 and 2020.

The segment has recorded losses over the past three financial years, particularly in the financial year ended June 30, 2023 (FY2023), due to a seasonal drop in fresh fruit bunch production and rising finance costs.

Losses were further impacted by higher depreciation, amortisation, and estate operating costs associated with newly matured areas, noted Golden Land, which will still have a plantation portfolio after the sale.

The group's wholly owned subsidiary PT GLG, along with two minority shareholders, has entered into a conditional share purchase agreement to sell their entire equity interests in the two units.

The buyers are PT Evans Indonesia and PT Teguh Jayaprima Abadi.

Golden Land estimates a net pro forma gain of RM25.95 million from the disposals. This translates into just under 12 sen per share, based on its share base of 222.91 million shares. 

Of the RM147.25 million proceeds, RM108 million will be used to repay bank borrowings, reducing its total borrowings to RM80.23 million from RM188.23 million.

Additionally, the group plans to allocate RM15.2 million for its existing property development projects, RM12.83 million for capital expenditure in its remaining plantation business, and the balance for working capital and related expenses.

It expects the transaction to be completed by the third quarter of 2025, subject to obtaining all necessary approvals.

Moving forward, Golden Land aims to manage costs and pursue new asset acquisitions to diversify its revenue stream and enhance profitability.

It noted that its property development segment remains profitable, driven by lower recurring costs and new project launches.

Shares in Golden Land closed unchanged at 27 sen on Wednesday, giving the company a market capitalisation of RM60.2 million. The group, loss-making since 2018, is trading at price-to-book ratio of 0.18 times, based on its net assets per share of RM1.48 before deducting minority interests.