Guthrie wraps up RI plantation deal

Guthrie wraps up RI plantation deal

Reuters, Kuala Lumpur

Malaysian plantation group Kumpulan Guthrie on Monday won shareholder approval to wrap up a controversial acquisition of Indonesian estates worth US$368 million.

With the deal completed, Guthrie said it is now seeking to merge its plantation business with those of its listed subsidiaries Highlands and Lowlands Bhd and Guthrie Ropel Bhd.

"That's the final part of the total picture of Kumpulan Guthrie," Khalid Ibrahim, Group Chief Executive, said after shareholder approval of the Indonesian deal.

But Khalid said details of the restructuring, being worked out by advisers, were unlikely to emerge before mid-2002.

"We are in no position to explain the final feature of the restructuring. You will get an announcement before the end of Q2 2002," he said.

Sector analysts said the merger would create one of Malaysia's largest plantation groups. The three companies are among the country's largest producers of palm oil, producing a combined 600,000 tons of oil a year or seven percent of national output.

The three are also involved in property development by converting some of their vast plantation land into housing.

Guthrie, moving to expand its plantation interests overseas, paid the Indonesian Bank Restructuring Agency (IBRA) $368 million in March for the purchase of 25 plantations once owned by the troubled Salim Group.

Critics in Indonesia have expressed concern the deal would lead to foreign domination of the country's lucrative palm oil industry, with some asking that the deal be canceled.

The deal involved 200,000 hectares (494,000 acres) of oil palm plantations. Indonesia is the world's second largest palm oil producer after Malaysia.

Shareholders on Monday also approved a plan by Guthrie to sell a large piece of plantation land outside Kuala Lumpur to Golden Hope Plantations for 565 million ringgit ($148.7 million).

Khalid said the deal would yield net proceeds of 363 million ringgit, which would be used to partly cut Guthrie's debt of two billion ringgit.

Most of the debts were due to financing the Indonesia deal.

"What we are doing is replacing the high net worth assets with high income-generating assets," Khalid said.

He expects its Indonesian estates to produce 600,000 tons of crude palm oil by 2003, adding to Kumpulan Guthrie's Malaysian output of more than 300,000.

"Assuming 1,000 ringgit a ton, this will give us a revenue projection of one billion to 1.5 billion ringgit," he said.

Crude palm oil prices are currently trading at over 1,100 ringgit a ton in Malaysia.

The Guthrie deal was IBRA's second biggest sale after $500 million or so it received from selling its stake in Indonesia's largest car maker, Astra International, in 1999.

Guthrie shares closed unchanged at 2.0 ringgit on Monday.