KUALA LUMPUR (Oct 30): Plantation group FGV Holdings Bhd (KL:FGV) has approved a loan of RM260 million to its 72%-owned subsidiary FGV Palm Industries Sdn Bhd (FGVPI) to finance FGVPI’s capital expenditure requirements.

In a filing with Bursa Malaysia on Wednesday, FGV said it has entered into an inter-company loan agreement with FGVPI for the loan, which will be broken into five tranches with a tenure of seven years. The first three tranches have an effective interest rate of 5.47% per year, the fourth tranche 5.67% per year and the fifth tranche 5.69% per year.

FGVPI's principal activities are the provision of tolling services related to the processing of fresh fruit bunches into crude palm oil and palm kernel, and the sale of by-products from the tolling activities. Koperasi Permodalan Felda Malaysia Bhd (KPF) holds the remaining 28% stake in FGVPI.

The Federal Land Development Authority (Felda) is a majority shareholder of FGV, with 69.5% direct interest and 12.42% indirect interest through its direct wholly-owned shareholding in Felda Asset Holdings Co Sdn Bhd.

KPF’s board representative in FGVPI is Sulong Jamil Mohamed Shariff, who is also a director of KPF.

FGV said the loan is not expected to have any material effect on the group's earnings per share, net tangible assets per share, share capital and substantial shareholders’ shareholding for the current financial year ending Dec 31, 2024.

FGV shares closed up three sen or 2.75% to RM1.12 on Wednesday, giving it a market capitalisation of RM4.09 billion. The stock has fallen 18.84% so far this year.