Boustead sees RM527 mil windfall from land sale to S P Setia

KUALA LUMPUR (Dec 23): Boustead Plantations Bhd, which is selling five adjoining plots of freehold land in Penang for RM620.12 million to S P Setia Bhd for the latter’s multibillion-ringgit township — planned for launch in 2019/2020 — stands to pocket an estimated gain of RM527.3 million from the deal.

This represents a gain of 33 sen per share, said Boustead Plantations in a statement yesterday. The announcement confirms a report by The Edge Financial Daily on Nov 11 that Boustead Plantations was the seller of the Seberang Perai Utara land.

The disposal of the plots, measuring 677.78ha in total, will unlock value for the group, said Boustead Plantations vice-chairman Tan Sri Lodin Wok Kamaruddin.

The sale consideration represents a premium of RM7.12 million or 1.16% over the fair market value of the land of RM613 million accorded by the valuer, Messrs Raine & Horne.

“Weighing the prospect of maintaining the asset, even with crude palm oil trending at favourable levels, the sale of the land offers greater value to the group,” he said.

“Proceeds of the proposed sale will also enable the group to strengthen its liquidity position, and move forward with our expansion strategy to acquire viable and economical plantation land banks when the opportunity arises,” added Lodin.

Boustead Plantations inked an agreement with S P Setia’s wholly-owned subsidiary Setia Recreation Sdn Bhd to effect the land sale yesterday.

The announcement came following a successful bid put in by Setia Recreation during a tender conducted for the sale of the land, which is located within the Butterworth-Sungai Petani Growth Corridor.

Separately, S P Setia said the purchase is expected to be funded by proceeds from its issuance of Islamic redeemable convertible preference shares, which was completed on Dec 6, and/or bank borrowings.

The property developer said the acquisition marks the group’s maiden entry into mainland Penang.

The land, it added, is planned for the development of a mixed development township with an estimated gross development value of RM9.6 billion — which it announced on Nov 9 — comprising landed and high-rise housing development and commercial components. It expects to take 15 to 20 years to complete the township.

This article first appeared in The Edge Financial Daily, on Dec 23, 2016. Subscribe to The Edge Financial Daily here.