As part of the reinvention strategy by parent company Boustead Holdings, Boustead Plantation is disposing 5 parcels of its agriculture land in Kulai, Johor with an estimated 663 hectares span to SIPP Power Sdn Bhd.
The freehold land, located on the north side of Jalan Alor Bukit, which branches off the Kulai-Air Hitam main road will be sold for RM428,818,278 is roughly around RM6 per sq. foot. Currently the land is cultivated as an oil palm plantation known as the Kulai Young Estate
Based on its Bursa filling, Boustead intends to utilise RM361.54 million of the disposal consideration to repay bank borrowings which are due in the year 2022 and 2023. The finance cost savings based on weighted average interest/profit rate of 4.28% per annum arising from the repayment of bank borrowings is about RM15.47 million.
Other than that, it will be also using some of the proceed for working capital requirements mainly for day-to-day operations to support BPB Group’s business operations.
The payment for working capital would include, implementation of Boustead Plantation reinvention strategy programs such as plantation and mill integration, and digitalisation of data. However, the company indicated that the breakdown of proceeds to be utilised for each component of working capital has not been determined at this juncture. Further, the actual amount to be utilised by each component of working capital may differ subject to the operating requirements at the time of utilisation. Any surplus or shortfall of funds for the payment of real property gains tax for the proposed disposal will be adjusted accordingly to or from the amount allocated for the working capital, as the case may be.
As for the buyer, SIPP Power Sdn Bhd is a cash rich company which manages Southern Power Energy that operates power plants in Johor, the company is believed to be controlled by the Johor Sultan.
