KUALA LUMPUR (Aug 6): The Federal Land Development Authority (Felda) has yet to enforce an arbitration award in its favour over a multibillion-ringgit put option involving shares in Indonesia’s Eagle High Plantations, as the Rajawali Group has filed a petition to block its enforcement in the Indonesian courts.
Deputy Prime Minister Datuk Seri Dr Ahmad Zahid Hamidi said Rajawali — via its entities PT Rajawali Capital International (RCI) and PT Rajawali Corpora (RC) — filed the Gugatan Penolakan or Non-Eksekuatur application at the Central Jakarta District Court (CJDC) on Feb 6 this year.
The petition challenges the arbitration award issued by the Singapore International Arbitration Centre (SIAC) on June 14, 2024, which ruled in favour of Felda-owned FIC Properties Sdn Bhd (FICP) in its attempt to exercise the put option to sell its 37% stake in PT Eagle High Plantations Tbk back to Rajawali.
"Nevertheless, in compliance with CJDC regulations and considering FICP’s responsibilities under these rules, further detailed information cannot be disclosed at this time," Zahid said in a written parliamentary reply to Datuk Dr Radzi Jidin (PN–Putrajaya) on Tuesday.
The put option was part of a share sale agreement between FICP and Rajawali when FICP acquired the 37% stake in 2015 for US$505.4 million (RM2.13 billion), or 580 Indonesian rupiah per share. The deal was controversial due to the 95.86% premium paid over 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 fund the acquisition, defaulted on the loan 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–turned-prisoner Datuk Seri Najib Razak.
FICP issued its first put option notice in January 2019, citing Eagle High’s failure to meet key terms of the agreement, including obtaining Roundtable on Sustainable Palm Oil certification within 30 months.
Minister in the Prime Minister’s Department (Law and Institutional Reform) Datuk Seri Azalina Othman Said previously revealed that either RCI or RC was required to pay US$678.09 million to repurchase the stake.
However, Rajawali disputed the claim and initiated arbitration to prevent Felda from exercising the option — an outcome that initially favoured Eagle High.
Felda then attempted to exercise the option a second time in May 2022, which Rajawali again contested. Nevertheless, SIAC’s June 2024 award ordered either or both Rajawali entities to fulfil their obligation by repurchasing the Eagle High shares at the price agreed with FICP.
In his latest parliamentary reply, Zahid stressed that Felda and FICP have consistently maintained the put option is valid, and expressed satisfaction that the tribunal upheld this position.
Felda’s financial position
On Felda's financial position, Zahid said the agency's bid to take FGV Holdings Bhd (KL:FGV) private is a strategic move expected to boost Felda’s income and cash flow.
Felda’s privatisation bid — through an offer of RM1.30 per share — has crossed the 90% shareholding threshold as of July 29. As a result, trading in FGV shares will be suspended at market close on Aug 15.
Zahid added that Felda remains financially stable with positive cash flow, as management continues to improve efficiency and reduce expenditures.
He said Felda's revenue is supported by income from its land lots, fixed leases, profit-sharing from plantation land lease agreements, rental income, and dividends from subsidiaries.
For more Parliament stories, click here.