FGV: Still no official notice from Felda on LLA termination

TheEdge Tue, Nov 17, 2020 04:10pm - 2 months ago


KUALA LUMPUR (Nov 17): FGV Holdings Bhd said it has still yet to receive any official notice from the Federal Land Development Authority (Felda) on the termination of the land lease agreement (LLA).

During the group's third-quarter financial performance briefing earlier today, FGV group chief executive officer Datuk Haris Fadzilah Hassan said it had written to Felda, adding that any further development on the matter will be done through a joint statement between the two parties.

"As of now, the situation is still status quo. We have not received any official notice from Felda with regard to the LLA," he said.

He also pointed out that the LLA only governs the estates that are on a 99-year lease to FGV, while the group owns the palm oil mills and reiterated that any discussion or interest in the oil mills will have to be taken on a commercial and willing buyer-willing seller basis, as the mills are not governed by the LLA.

However, there has been no discussion between FGV and Felda on the latter's plan to acquire the mills, added Haris.

"We have 68 mills in Malaysia, which are key to our business, because as you know, the LLA land only represents about 30% of the FFB (fresh fruit bunch) that our mills process. Another 70% of the FFB actually comes from the settlers as well as the third-party suppliers.

"Even without the LLA land, we still need the mills to process the other 70% of the FFB. It is a very critical part of FGV's capability in terms of processing the FFB, as well as going further into the downstream markets," he explained.

Asked on the price tag for the mills, he declined to give any specific figure but said that a new mill built today would roughly cost about RM1 million per metric tonne (MT) of capacity, adding that a 60 MT capacity mill, for example, would cost about RM60 million.

Meanwhile, post-LLA, Haris said the group will focus on its core business, namely plantation, logistics and sugar, and highlighted that FGV has two new segments now — integrated farming and fast moving consumer goods — to beef up its revenue stream going forward.

"This is something that we feel is very relevant in our quest to focus on the food sector, given that Malaysia has its own challenges when it comes to food security. We feel that FGV is in a good position to be a player in that sector," he said.

On the expression of interest received from Tan Sri Syed Mokhtar's private vehicle Perspective Lane (M) Sdn Bhd (PLSB) for the injection of plantation assets into FGV, Haris said the group has received an official letter from the interested party.

He added that FGV is in the process of determining the assets involved, which he said exclude Central Sugars Refinery Sdn Bhd (CSR).

CSR, one of the two large sugar refiners in Malaysia, is owned by PLSB, while its competitor MSM Malaysia Holdings Bhd is a 51% unit of FGV.

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