KUALA LUMPUR (Oct 1): Tien Wah Press Holdings Bhd (KL:TIENWAH) said its unit plans to buy a factory in Malang, Indonesia, which it currently leases, for 150 billion rupiah (RM34.07 million) from British American Tobacco (BAT) Group’s PT Bentoel Prima.

The five parcels of land, measuring 5.78 acres, are currently used by Tien Wah’s 51%-owned unit, PT Bintang Pesona Jagat (BPJ), for its tobacco packaging printing operations.

A binding sale and purchase agreement was inked between BPJ and Bentoel Prima on Thursday, according to a bourse filing.

Tien Wah said the acquisition will allow BPJ to continue operating at the site after its current lease expires, while supporting its bid for BAT Group’s proposed five-year supply contract for 2027 to 2031. 

“The proposed acquisition will enable BPJ to continue operating from the land and building without relocating its operations upon expiry of the existing tenancy arrangement,” it said.

The agreed price-tag takes into consideration the property’s market value of 164.65 billion rupiah, appraised by an independent valuer in September last year, and its strategic importance to BPJ’s existing and prospective business operations, Tien Wah noted.

The purchase consideration will be covered via a combination of Tien Wah’s internally generated funds and bank borrowings based on its shareholding in BPJ. Tien Wah's major shareholder, Singapore-listed New Toyo International Ltd, owns the remaining 49% stake in BPJ, which provides printing services for tobacco packaging.

A 120 billion rupiah term loan facility has already been secured by BPJ from PT Bank OCBC NISP Tbk in September this year to part-finance the land purchase, Tien Wah noted. 

It expects to complete the acquisition by year end.

In a separate filing, Tien Wah announced on Thursday that its units have secured three commercial agreements with BAT Group in Indonesia and Singapore.

BPJ has secured a five-year extension on its printed cartons supply contract for the group’s tobacco and other nicotine products requirements in Indonesia. Its contract with Bentoel Prima has been extended for the second time to now span from Oct 1 this year to end-October 2031.

Besides that, its wholly-owned unit Alliance Print Technologies Co Ltd also entered into a five-year commodity supply agreement with Bentoel Prima for BAT Group’s requirements in Indonesia.

Tien Wah’s other 51%-owned unit, Max Ease International Ltd, also secured a supply contract extension with British-American Tobacco (Singapore) Pte Ltd, running from Jan 1, 2027 to October 2031.

Shares of Tien Wah ended one sen or 1.43% higher at 71 sen on Thursday, valuing the company at RM102.77 million.