TSH to sell land in North Kalimantan for RM712 million

KUALA LUMPUR (April 4): TSH Resources Bhd has announced its plan to dispose of oil palm plantation land in Indonesia's North Kalimantan province for a total cash consideration of RM711.66 million.

On Monday (April 4), TSH's 90%-owned subsidiary PT Bulungan Citra Persada (BCAP) entered into a conditional sale, purchase and compensation of land agreement with buyers PT Kawasan Industri Kalimantan Indonesia and PT Kalimantan Industrial Park Indonesia, to dispose of 13,214.9 hectares together with the uncertified land adjoining the plantation measuring 683.36 hectares.

This follows a heads of agreement entered between BCAP and the buyers on Dec 9 last year, in relation to a proposed disposal of land for a cash consideration of RM678.97 million.

TSH said the disposal consideration was arrived at on a willing buyer-willing seller basis. The deal is expected to be completed by the first quarter of 2023.

"For shareholders' information, the land has been earmarked for the development of an integrated green industrial estate in North Kalimantan province by the government of Indonesia," TSH said.

TSH noted the group is expected to record a pro forma gain on disposal of approximately RM400.31 million pursuant to the proposed disposal, based on the disposal consideration and the audited net book value of the land of approximately RM271.16 million as at Dec 31, 2020.

"The proposed disposal enables the group to raise cash proceeds amounting to approximately RM711.66 million for its partial repayment of interest-bearing borrowings," it said.

From the proceeds, TSH anticipates to use RM550 million to pare debt, RM45 million for planting purposes, RM47 million for infrastructure and capital expenditure, and RM50 million for general working capital.

"The group will be able to conserve its internally generated funds to strengthen its financial position," it added.

With the utilisation of proceeds, TSH expects to reduce its gearing ratio to 0.4 times, from 0.9 times. It added the transaction will also improve its ability to borrow further should new business opportunities arise; and improve the group's cash flow position due to lower interest expenses.

TSH's share price settled for the day two sen or 1.23% higher at RM1.65, bringing a market capitalisation of RM2.28 billion.