Boustead unit to replant Sabah land

PETALING JAYA: Boustead Plantations will progressively replace old oil palm trees of the five estates encompassing 11,579.31hectares (42 parcels of land) which is bringing from Dutaland Bhd's Pertama Land Sdn Bhd for RM750 million in Labuk and Sugut in Sabah.The purchase is through its unit Boustead Rimba Nilai Sdn Bhd and have a planted area of 10,000 hectares.

It will embark on measures to increase its productivity, which currently is almost 47% lower than the fresh fruit bunch (FFB) yield of Boustead Plantations' estates in Sabah of 16.6 tonnes a tonne.

Among the measures planned are progressive replanting of old and low-yielding fields and the construction of a new palm oil mill in one of the estates.

The management plans to replant about 7,400ha of the 9,998ha of plantable area in the estates over the next 10 years with improved high-yielding semi-clonal and clonal oil palms, which is expected to boost the FFB yield and profitability of the estates in the long run.

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Boustead Plantations estimates a total investment of RM250 million for the above measures which will be implemented over 10 years upon completion of the deal.

For the financial year ended June 30, 2017 the estates made a profit of RM24.69 million.

The acquisition by Boustead Plantations is to be financed through a combination of internally generated funds (RM300 million) and borrowings (RM450 million).

BPB said the proposed acquisition is part of its strategy to acquire more plantation land in Malaysia in view of the scarcity of suitable and sizeable land banks for oil palm cultivation, at a lower cost.

The total plantation land bank held by the Boustead Plantations group will increase by about 14.1%, from 81,838ha to 93,417ha. This also represents an increase of 15.7% in total planted area of oil palms from 63,840ha to 73,838ha.

The proposed acquisition is expected to be completed by the second quarter of 2018. Affin Hwang Investment Bank is the principal adviser to Boustead Plantations for the acquisition.

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Meanwhile, Dutaland said the bulk of the proceeds from the sale, RM707 million, will be earmarked for it to acquire new businesses which will generate recurring income. Dutaland has invested about RM173 million for the assets since 1995.

Boustead Plantations' share price closed unchanged at RM1.63 today. Dutaland's share price was up 1.5 sen to close at 73 sen with some 21 million shares traded.

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