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.