TDM to buy 70% stake in plantation company

PETALING JAYA: TDM Bhd today entered into a heads of agreement (HOA) with TH Plantations Bhd (THP) for the acquisition of a 70% stake in THP-YT Plantation Sdn Bhd for RM7 million.

THP-YT is the registered owner of three parcels of plantation land in Mukim of Caluk and Marang, all in the district of Setiu, Terengganu with a total land area of 2,594ha, known as Ladang Bukit Bidong. A total area of 2,307ha had been planted with oil palm plantation with an age profile ranging from two to nine years old.

The HOA will enable THP and TDM to negotiate and finalise the terms for the exercise. Upon completion of the proposed acquisition, THP-YT will be a subsidiary of TDM.

Since the estate is located in close proximity to TDM existing plantations and its palm oil mill, the proposed acquisition would optimise TDM processing capacity and lower the mill processing cost/mt fresh fruit bunch at its Sungai Tong mill. The age profile of the estate ranges from two to nine years. The exercise will improve TDM average age profile and contribute positively to TDM’s cashflow.

Upon completion of the acquisition, TDM’s total planted oil palm area in Terengganu will increase from 31,346ha to 33,653ha.

TDM chairman Raja Datuk Idris Kamarudin said looking further ahead, it is rolling out its business development plan to strengthen the platform for sustained growth into the future.

“The acquisition is part of the group’s overall strategy to improve the average age profile and reduce fluctuation in revenue. TDM is strategically positioning itself to stay competitive in highly challenging market conditions.”

TDM’s wholly-owned subsidiary, namely TDM Plantation Sdn Bhd has been certified sustainable by the Roundtable on Sustainable Palm Oil and Malaysian Sustainable Palm Oil.

“TDM’s believes that the strategic value creation to be derived from the proposed acquisition will translate into operational efficiencies thus improving profitability in the long run,” said Idris.

TDM is also looking forward to the Securities Commission’s (SC) review in May 2020 and the potential reinstatement of TDM as a syariah-compliant security. TDM believes that it has in principle complied with the SC’s requirements and now awaits for the outcome of the review by the SC in May 2020.

source https://www.thesundaily.my/business/tdm-to-buy-70-stake-in-plantation-company-DM1842072