KUALA LUMPUR (April 25): Kuala Lumpur Kepong Bhd (KLK) has proposed to acquire a 95% stake in Indonesia’s PT Putra Bongan Jaya (PBJ) from PT REA Kaltim Plantations for RM296.4 million, subject to adjustments.

PBJ’s principal activities are the establishment of palm oil plantations and operations. It is also involved in the crude vegetable oil industry.

In a filing with Bursa Malaysia, KLK said it will be buying 95% of PBJ or 139,308 shares of nominal value RP500,000 per share for about RM296.4 million, which is equivalent to 95% of the total valuation of PBJ’s land and plantation, amounting to RM312 million.

The consideration for the proposed acquisition shall be adjusted on completion, based on, among others, PBJ’s working capital and other balance sheet items.

The proposed acquisition will be funded by a combination of existing cash reserves and bank borrowings.

The proposed acquisition will be a unique opportunity for KLK to acquire a company with a brownfield oil palm plantation, the filing added.

“The proposed acquisition is in the ordinary course of business of KLK Group and is also in line with KLK’s business direction to expand its plantation landbank,” the company added.

While the proposed exercise is not expected to have any material effect on the group’s earnings and gearing for the financial year ending Sept 30, 2018 (FY18), it is anticipated to contribute positively to its future earnings.

Since Feb 27, 2009, PBJ has be granted the right to cultivate oil palm for a total area of approximately 11,602 hectares located at Desa Muara Kedang and Muara Gusik, Kecamatan Bongon, Kutai Barat, Kalimantan Timur in Indonesia for 35 years, and renewable for an additional 25 years, KLK said.

Additionally, PBJ has also been granted the location permit for three years, for oil palm plantations of a total area of about 4,460 hectares at Kampung Bukit Harapan, Jambuk Makmur, Jambuk and Muara Gusik, Kecamatan Bongan, Kutai Barat, Kalimantan Timur since June 16, 2017, renewable for another one year.

The proposed exercise is expected to be completed in the third quarter of 2018.

Shares in KLK closed down two sen or 0.08% at RM25.48 today, giving it a market capitalisation of RM27.14 billion.