Highlight FGV renegotiates Eagle High deal

by **Cals** Tue 01 Dec 2015, 00:38

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[size=28]FGV renegotiates Eagle High deal

By Gho Chee Yuan / theedgemarkets.com | November 30, 2015 : 7:40 PM MYT

KUALA LUMPUR (Nov 30): Felda Global Ventures Holdings Bhd ([You must be registered and logged in to see this image.] Valuation: 0.80, Fundamental: 1.15) said it is in discussion with PT Rajawali Capital International for “a possible different mode of investment in PT Eagle High Plantations”.

"In this regards, the parties agreed that the deadline to enter into the conditional sales and purchase agreements (CSPAs) will no longer be applicable. Any development of the above will be announced in due course," the plantation group announced to Bursa Malaysia this evening.

FGV’s announcement on exploration of a different mode of investment in the Indonesian plantation company, came after Reuters, quoting sources, reported that FGV would scrap its current plan to buy a 37% stake in Eagle High, after the deal was criticised as too expensive and market conditions deteriorated.

To recap, FGV had in June, proposed to buy a 37% equity stake in Eagle High for RM2.4 billion (US$680 million). The sharp depreciation of the ringgit has made the acquisition get even more costly.

On June 12 this year, FGV, the world's third largest palm plantation operator, had signed a heads of agreement withRajawali Group to acquire a 37% stake in Eagle High for US$680 million, which will be settled in cash and stocks. Eagle High owns 425,000 hectares of oil palm plantations, out of which 67% are in Kalimantan and the rest in Papua New Guinea (9%), Sulawesi (19%) and Sumatra (5%).

In addition, under the agreement, FGV proposed to take over 95% stake in PT Cendrawasih Jaya Mandiri (CJM), 95% stake in PT Karya Bumi Papua (KBP), and 93.3% stake in PT Rizki Kemilau Berjaya, for total sum of US$66.5 million.

These companies are involved in Rajawali Corpora’s sugar project and are actively involved in greenfield development and cultivation of sugar cane. CJM and KBP have been awarded a concession to operate sugar cane plantations and crushing mills.

FGV's share price dropped two sen or 1.12% at RM1.77 today, for a market capitalisation of RM6.35 billion.

(Note: The Edge Research's fundamental score reflects a company's profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)

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