Guthrie to proceed with $368m Holdiko investment
Guthrie to proceed with $368m Holdiko investment
KUALA LUMPUR (AFX-ASIA): Kumpulan Guthrie Bhd. will proceed
with its planned investment in the Holdiko Palm Plantations in
Indonesia despite opposition by the Indonesia Palm Oil Society,
its group chief executive Abdul Khalid Ibrahim said.
"We do not see any indication from IBRA (Indonesian Bank
Restructuring Agency) or the government of Indonesia not to
continue with the completion of this exercise," he told reporters
after signing a 1.5 billion ringgit Islamic syndicated financing
facility.
He said it is quite common for certain parties in Indonesia to
protest against the sale of assets by IBRA.
"There are quite a number of sentimental reasons for that
mainly because these assets are assets taken over by the
government of Indonesia from the owners and not because the
owners have problems with their banking facilities, " he added.
Abdul Khalid said that when considering the investment,
Kumpulan Guthrie was aware of such opposition from members of the
Indonesian community.
"Therefore, we must be contributive to the employees and the
society there," he said, adding that Kumpulan Guthrie will not
retrench or replace any of the existing staff in Holdiko.
The Indonesian Palm Oil Society sent a letter on Dec. 7 to
President Abdurrahman Wahid urging him to cancel the sale of
Salim Group's plantations to Kumpulan Guthrie.
PT Holdiko Perkasa, held by IBRA, has agreed to sell its
stakes in four palm plantation holding companies to Kumpulan
Guthrie.
Abdul Khalid said Kumpulan Guthrie will pay IBRA US$368
million for the stakes in Holdiko on Dec. 22.
He also said there is currently an arrangement between Holdiko
and Indofood to sell to the latter all the crude palm oil
produced by the Holdiko plantation.
Following Kumpulan Guthrie's acquisition of Holdiko, Abdul
Khalid said he does not see any problems in continuing the
arrangement.
He added that the 1.5 billion ringgit loan facility will place
Kumpulan Guthrie in a highly geared position but "with the
flotation and restructuring of Kumpulan Guthrie's assets, our
long term borrowings will come down to a more manageable level."
Kumpulan Guthrie has plans to set up a holding company to hold
the Holdiko investment, to be subsequently listed on the Jakarta
Stock Exchange.
Abdul Khalid declined to provide details for the plans but
would only say the listing will take place in three years.
He also declined to provide details of Kumpulan Guthrie's
plans to raise $400 million worth of global Islamic bonds to
refinance the Islamic loan facility.
Details of the bond issue will be provided in a circular to
shareholders which is expected to be out next month.
Asked how the Indonesian investment will reduce the overall
cost of Kumpulan Guthrie's plantation operations, Abdul Khalid
said: "Based on the current statistics, for every ton of CPO
(crude palm oil) the (cost of production) is 200 ringgit cheaper
in Indonesia than in Malaysia".
He also said he expects the current overhang in the CPO market
to be settled next year, from which CPO prices are expected to be
at 1,200 ringgit to 1, 500 ringgit per ton.