Greenyield obtains shareholders' approval to acquire 65pc of GRHM for RM87.8mil

NST Fri, Jul 08, 2022 11:24pm - 1 year View Original


KUALA LUMPUR: Greenyield Bhd, an agrotech and horticultural company has obtained shareholders' approval to acquire a 65.0 per cent equity interest in Greenyield Rubber Holdings (M) Ltd (GRHM) for RM87.8 million.

The company will acquire GRHM stake from Greenyield Holdings Sdn Bhd (GHSB), Premium Commodities Sdn Bhd, Tham Foo Keong, Tham Foo Choon, Tham Kin-On and Foong Sai Cheong after shareholders approved the deal in a recent extraordinary general meeting.

Greenyield executive director Tham Kin-On said the company is now one step closer to owning 15,313 ha of plantation land in Papua New Guinea.

"We believe the timing is opportune as the target asset has turned profitable, and we can ride on the uptrend in demand growth for rubber and coconut going forward," he said in a statement.

GRHM is an investment holding company and an agent to market and sells rubber and rubber wood. At the same time, its subsidiaries are involved in the extraction, processing, and supply of rubber and agriculture.

The company owns 15,313 ha of plantation properties in Papua New Guinea, comprising 6,450 ha of plantable area for rubber (of which 3,513 ha are planted) and 3,613 ha of plantable area for coconut.

"In addition to supplying plantation inputs to estate owners, Greenyield also owns 1,200 ha of rubber estates in Kelantan, and the company aims to strengthen its presence upstream.

"As such, this opportunity to own scarce titled land in Papua New Guinea amounting to 15,313 ha is rare.

"The acquisition would enhance our earnings stream and provide us with a greater source of recurring income, which the company would further enrich with crop diversification to include coconut trees.

"At the same time, Greenyield can extend the use of its plantation products and technology to boost productivity," Tham said.

Greenyield targets planting and replanting up to 500 ha and 300 ha of rubber and coconut trees every year.

"All in all, we are excited by what is ahead of us and continue to be confident in this venture premised upon our proven track record, experience, and knowledge, as well as the favourable macroeconomic environment.

"Ultimately, the acquisition is expected to contribute positively to Greenyield's earnings and cash flow, thus, enhancing shareholders' value," Tham said.

The acquisition amount was arrived at on a willing-buyer, willing-seller basis after taking into consideration, amongst others, the revalued net asset value (RNAV) of GRHM, the indicative market value of the 15,313 ha of plantation land, and the rationale and benefits of the acquisition, as well as the prospects of GRHM.

The acquisition amount will be satisfied via RM3.0 million in cash, and the issuance of 226.0 million new shares in Greenyield at an issue price of RM0.29 per share, amounting to RM65.6 million.

Further, Greenyield will also issue 66.4 million new irredeemable convertible preference shares (ICPS) at an issue price of RM0.29 per ICPS, amounting to RM19.2 million. In addition, up to 19.1 million ICPS shall be issued later.

The acquisition is deemed a related party transaction given the common interests of certain directors and major shareholders in both the target asset and Greenyield.

Accordingly, the interested directors and major shareholders abstained from voting, and the non-interested shareholders of Greenyield passed the resolution.

The exercise is expected to be completed by the third quarter of 2022.

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