MKH proposes Main Market listing of oil palm plantation arm

KUALA LUMPUR (March 29): Property developer MKH Bhd plans to list its oil palm plantation arm MKH Oil Palm (East Kalimantan) Bhd (MKHOP) on the Main Market of Bursa Malaysia by the fourth quarter of 2023.

According to a filing on Wednesday (March 29), MKH proposes to undertake an initial public offering (IPO) of 24.5% of MKHOP’s enlarged share capital, after completing a slew of pre-listing corporate exercises.

The group said prior to the IPO, MKHOP is to undertake a one-to-six share split which would result in the unit’s share base expanding from 110.47 million shares to 662.81 million shares, with a maintained issued share capital of 110.47 million.

Subsequent to the share split, MKHOP is to acquire the remaining 5.67% stake in PT Maju Kalimantan Hadapan (PT MKH) from MKH’s wholly-owned Metro Kajang (Oversea) Sdn Bhd and PT Hikmat Aliran Sukses for RM53.52 million to be satisfied via the issuance of 44.23 million new MKHOP shares at RM1.21 apiece.

Additionally, MKHOP is to acquire the entire equity interest in PT Sawit Prime Sakti (PT SPS) from MKH Plantation Sdn Bhd, Ivakijaya Sdn Bhd and PT Hikmat for RM27.86 million to be satisfied via the issuance of 23.03 million new shares at RM1.21 per share.

Upon completion of the share split and acquisitions, MKHOP is to undertake a proposed capitalisation where it will take over borrowings of PT MKH and PT SPS totalling RM118.97 million owing to Metro Kajang, and capitalise 80.55% or RM88.97 million of the enlarged borrowings with the issuance of 73.53 million shares at RM1.21 apiece.

The remainder 19.45% or RM30 million is to be repaid from its IPO proceeds.

Following this, MKH proposes to undertake a distribution by way of dividend-in-specie of 10.3% in MKHOP or 82.48 million shares on a one-to-seven basis to entitled shareholders, to reduce its total shareholding to 84.2% from 94.4%.

After completing the slew of corporate exercises, MKH is to undertake the IPO of 250.71 million MKHOP shares, representing 24.5% of the unit’s enlarged share capital at an issue price to be determined later.

The listing exercise is to comprise 220 million new shares under the public issue and an offer for sale of 30.71 million existing MKHOP shares held by Metro Kajang.

Proceeds accrued by MKH from the offer for sale will be used to repay borrowings, while proceeds from the public issue are to be used by MKHOP for, among others, capex on its existing plantation lands as well as expand its land banks.

M&A Securities has been appointed as MKH and MKHOP’s advisers for the proposals.

Barring any unforeseen circumstances and subject to requisite approvals from MKH’s shareholders, the Securities Commission Malaysia, the Ministry of International Trade and Industry and Bursa Securities, the proposals are expected to be completed by the fourth quarter of 2023.

MKHOP owns two oil palm plantation estates with a combined plantation area of 18,205.3 hectares, comprising 1,7008,8 hectares of planted area and 1,196.5 of unplanted as at LPD.

For the financial year ended Sept 30, 2022 (FY2022), MKHOP posted a profit after tax (PAT) of RM60.14 million, versus RM77.45 million in FY2021 and RM18.69 million in FY2020. As for revenue, the company logged RM315.82 million in FY2022, RM306.61 million in FY2021 and RM282.324 in FY2020.

Shares in MKH closed unchanged at RM1.19, giving the group a market capitalisation of RM697.99 million.