KUALA LUMPUR (May 29): WTK Holdings Bhd (KL:WTK) is disposing of its 85% stake and redeemable preference shares in Biogrow City Plantations Sdn Bhd for RM90 million cash, in a deal expected to generate a gain on disposal of about RM70.58 million.
The proposed disposal involves the sale of 8.5 million ordinary shares, representing an 85% equity interest in Biogrow City Plantations, for RM65.6 million, as well as 24.4 million redeemable preference shares for RM24.4 million.
The transaction will be undertaken by the timber and plantation group's wholly owned subsidiaries Biogrow City Sdn Bhd and Bioworld Synergies Sdn Bhd, which had entered into conditional share sale agreements with Rimbun Temasek Sdn Bhd, according to the group in a Bursa Malaysia filing on Friday.
Datuk Seri Patrick Wong Haw Yeong, who serves as the group managing director and chief executive officer of WTK, and his daughter Datin Sri Annie Wong Haw Bing are listed as directors of Biogrow City Plantations.
Upon completion of the disposal, Biogrow City Plantations will cease to be a subsidiary of Biogrow City, with the remaining 15% stake in the company held by the Sarawak State Financial Secretary.
Biogrow City Plantations owns an oil palm plantation spanning 3,487 hectares in Limbang, Sarawak, along with a 30-tonne-per-hour crude palm oil mill commissioned in 2017.
“The steep and challenging terrain of the oil palm plantation has resulted in low tree standing at an average 109 palms per hectare, which has affected the fresh fruit bunch (FFB) yield,” the group said in the filing. "Given the age of the palm trees with 100% of them in the prime mature and mature stage, the FFB yields achieved for the past four years are relatively low as compared to the industry average."
It added that the plantation’s location in Limbang, which is distant from WTK’s other plantation operations in Miri and Bintulu, had made economies of scale difficult to achieve while increasing transportation costs and labour challenges.
“The palm oil mill has been operating below capacity,” WTK said, noting that utilisation rates had ranged between 58% and 65% over the past four years due partly to difficulties sourcing third-party crops in Limbang.
The RM90 million proceeds have been earmarked for working capital purposes, including payments to suppliers and creditors, as well as operating and administrative expenses across the group.
The group expects the disposal to be completed in the fourth quarter.
The disposal comes amid ongoing legal disputes within the Wong family linked to the broader WTK group, with a separate Court of Appeal ruling recently affirming that shares in 20 privately held companies tied to the family had been fraudulently transferred to the late Datuk Wong Kie Nai, a former CEO of WTK. His widow Kathryn Ma Wai Fong is seeking leave to appeal to the Federal Court.
WTK’s third-generation scion, Haw Yeong, 56, is the son of the late timber tycoon Datuk Seri Wong Tuong Kwang’s eldest son, Datuk Seri Wong Kie Yik, 85.
WTK shares closed up two sen or 2.6% at 79 sen on Friday, giving the group a market capitalisation of RM380.3 million. The stock has risen 11.3% so far this year.