KUALA LUMPUR: TH Plantations Bhd (THP) will allocate about RM725 million for its capital expenditure (capex) for the next four years until 2016 for business expansion.

Its Chief Executive Officer and Executive Director, Datuk Zainal Azwar Zainal Aminuddin said the part of the capex would be used for the new planting of oil palm on about 23,000 hectares (ha) of land.

"Apart from new planting, the capex will also be used to build mills and for other development expenditure," he told reporters after THP's extraordinary general meeting (EGM) here today.

The EGM was called to seek shareholders' approval on its proposed
acquisition of two plantation companies from THP's major shareholder, Lembaga Tabung Haji.

Zainal Azwar said the group is looking to double its plantation landbank to 91,078ha from 44,933ha upon completion of the acquisition exercises.

He said the shareholders had approved the acquisition proposal and the group will acquire 100 per cent stake in TH Ladang Sabah and Sarawak (THLSS) and 70 per cent of TH Bakti Sdn Bhd for RM535.640 million.

"The proposed acquisition process will be completed in the next 10 days and it is expected to increase our landbank by 103 per cent and increase the total planted area of oil palm from 38,154ha to 53,805ha," he said.

THLSS is an invesment holding company with subsidiaries engaged principally in the cultivation of oil palm, processing of fresh fruit bunches (FFB), sales and marketing of FFB, crude palm oil (CPO) and palm kernel as well as teak and rubber plantation while TH Bakti is involved in cultivation of oil palm and
selling of FFB.

He said the proposed acquisitions would also provide an opportunity for the group to yield crop and earnings diversification from rubber plantation as about 15,714ha held by three subsidiaries of THLSS will be earmarked for planting and
replanting of rubber trees.

"The crop diversification will provide new income stream for THP group in the future," he said.

He added that FFB production will grow at a cumulative average growth rate of 15.6 per cent from 2013 to 2016.

"The average age of oil palm of THP group will also improve from 16 years to 14 years," he said. -- BERNAMA