SINGAPORE/KUALA LUMPUR (July 7): According to persons familiar with the situation, Malaysian conglomerate Boustead Holdings Bhd is considering various options for its publicly traded palm oil unit, including a sale. The parent company of Boustead Plantations Bhd is consulting with an adviser on various solutions, according to the sources, who asked not to be identified since the information is confidential. They suggested a plan may be executed as soon as the next few weeks.
According to the persons, the holding firm, which controls 57.4 percent of the subsidiary, might sell or lease the crops to third parties. Another alternative, according to one of the participants, is to sell the different plantations separately.
According to statistics provided by Bloomberg, Malaysia’s armed forces pension fund Lembaga Tabung Angkatan Tentera, which is the main stakeholder in Boustead Holdings, owns 12.1 percent of the plantations company. Boustead Plantations is worth roughly RM1.3 billion on the stock market.
The people indicated that discussions are still underway and that Boustead Holdings may decide not to forward with the deal.
In response to a Bloomberg News inquiry, a spokeswoman for Boustead Holdings said the company had no imminent intentions to reduce its share in Boustead Plantations. Boustead Plantations is a key contributor to the group’s performance, but the company is always looking for new ways to generate value, according to the company.
Challenges of restructuring
According to its results statement for the quarter ended March 31, Boustead Holdings is striving to reinvent itself amid issues that predate the coronavirus outbreak, including debt of about RM7.5 billion. Its stock plummeted in February after LTAT declared it would not pursue with a take-private bid for Boustead, citing the coronavirus epidemic as a reason.
One of Malaysia’s oldest companies, with origins dating back to 1828, pledged to sell non-strategic businesses as part of its restructuring plan.
After reaching an all-time high in May, palm oil prices are up 3.7 percent this year. Kuala Lumpur Kepong Bhd, a palm oil grower, offered to buy a controlling share in smaller rival IJM Plantations Bhd for RM1.5 billion last month.
According to their website, Boustead Plantations owns and leases 48 oil palm plantation properties and 10 palm oil mills in Malaysia. It has a land bank of around 98,200 hectares, with 79,400 hectares dedicated to oil palm agriculture.
According to an exchange filing Tuesday, the unit’s chief executive officer, Ibrahim Abdul Majid, left to join Boustead Holdings. Majid will be in charge of the plantation technology and innovation projects for the organization./n
