Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

On the 1 November 2011, <a href="https://www.smartkarma.com/entities/fgv-holdings-bhd" target="_blank" data-smartkarma-citation="entities:2200:1" rel="noopener">FGV Holdings Bhd (FGV MK)</a> signed a Land Lease (LLA) Agreement with Federal Land Development Authority (FELDA), whereby 351,000 ha of FELDA’s land was leased to FGV for 99 years.
On the <a href="https://www.fgvholdings.com/press_release/official-statement-of-fgv-holdings-berhad-on-felda-land-lease-agreement/?pagen=2" target="_blank" rel="noopener">20 October</a> this year, FGV sought to clarify the LLA agreement following various ongoing news reports about the possible termination of the LLA.  FGV said FELDA had yet to contact FGV to negotiate matters regarding the LLA.
Under the terms of the agreement, termination of the LLA is allowed. However, it is understood FGV’s compensation would be assessed on the average profit/mature hectare for the entire leased land, multiplied by the loss of FGV’s future profits.
FGV currently manages 493,750 ha of land, therefore the LLA accounts for ~70% of FGV's plantation.
FGV followed up on the <a href="https://www.fgvholdings.com/press_release/official-statement-of-fgv-holdings-berhad-on-feldas-recovery-plan-termination-of-land-lease-agreement-lla/?pagen=1" target="_blank" rel="noopener">29 October</a> reiterating it had yet to receive a written notice from FELDA regarding the termination.
Led by Tan Sri Abdul Wahid Omar, who headed a special task-force - and who is also chairman of Bursa Malaysia - FELDA <a href="https://www.astroawani.com/berita-bisnes/felda-akan-ambil-tanah-dan-beli-kilang-dari-fgv-266002?fbclid=IwAR1M9Hmap92N5Tq_64AlsI-od2N1DZ6nOGOmKcooPzOLj-0chhwR_p0oMZo" target="_blank" rel="noopener">announced</a> on the 30 October the termination of the LLA. Two days prior, Datuk Sri Mustapa Mohamed - Minister in the Prime Minister Department for Economic Affairs - announced that the Cabinet had agreed to the recommendation (tabled by the task-force on the 14 October) to the termination of FELDA’s LLA with FGV.
<h3>The New News</h3>
FELDA announced a possible <a href="https://www.bursamalaysia.com/market_information/announcements/company_announcement/announcement_details?ann_id=3112207" target="_blank" rel="noopener">mandatory takeover</a> of FGV at RM1.30/share. 
FELDA, which currently owns a 21.24% stake in FGV, entered into conditional sale and purchase agreements (SPAs) to buy the 6.1% and 7.78% stakes held by Kumpulan Wang Persaraan (Diperbadankan) and Urusharta Jamaah Sdn Bhd for RM658mn. Upon completion,  FELDA would hold 35.12%, which is above the 33% mandatory takeover offer threshold.
FELDA added that in conjunction with parties acting in converts (PACs), it would hold more than 50%. The names of these PACs were not made public. The conditions to the agreements are primarily one of funding and are expected to be completed within 3 months. 
FELDA intends to serve the mandatory offer notice on FGV once the SPAs have completed.
More below the fold.

On the 1 November 2011, FGV Holdings Bhd (FGV MK) signed a Land Lease (LLA) Agreement with Federal Land Development Authority (FELDA), whereby 351,000 ha of FELDA’s land was leased to FGV for 99 years.
On the 20 October this year, FGV sought to clarify the LLA agreement following various ongoing news reports about the possible termination of the LLA.  FGV said FELDA had yet to contact FGV to negotiate matters regarding the LLA.
Under the terms of the agreement, termination of the LLA is allowed. However, it is understood FGV’s compensation would be assessed on the average profit/mature hectare for the entire leased land, multiplied by the loss of FGV’s future profits.
FGV currently manages 493,750 ha of land, therefore the LLA accounts for ~70% of FGV's plantation.
FGV followed up on the 29 October reiterating it had yet to receive a written notice from FELDA regarding the termination.
Led by Tan Sri Abdul Wahid Omar, who headed a special task-force - and who is also chairman of Bursa Malaysia - FELDA announced on the 30 October the termination of the LLA. Two days prior, Datuk Sri Mustapa Mohamed - Minister in the Prime Minister Department for Economic Affairs - announced that the Cabinet had agreed to the recommendation (tabled by the task-force on the 14 October) to the termination of FELDA’s LLA with FGV.
The New News
FELDA announced a possible mandatory takeover of FGV at RM1.30/share. 
FELDA, which currently owns a 21.24% stake in FGV, entered into conditional sale and purchase agreements (SPAs) to buy the 6.1% and 7.78% stakes held by Kumpulan Wang Persaraan (Diperbadankan) and Urusharta Jamaah Sdn Bhd for RM658mn. Upon completion,  FELDA would hold 35.12%, which is above the 33% mandatory takeover offer threshold.
FELDA added that in conjunction with parties acting in converts (PACs), it would hold more than 50%. The names of these PACs were not made public. The conditions to the agreements are primarily one of funding and are expected to be completed within 3 months. 
FELDA intends to serve the mandatory offer notice on FGV once the SPAs have completed.
More below the fold.

Special Situations, Content Strategist, Smartkarma

Crispin Francis

Special Situations, Content Strategist

Smartkarma

Smartkarma unites the fragmented investment industry, connecting institutional investors, independent research providers, and corporates within a single network.

Research Reinvented

There has been recent news of a possible privatization for <a href="https://www.smartkarma.com/entities/2200" target="_blank" data-smartkarma-citation="entities:2200:1">Felda Global Ventures (FGV MK)</a>.FGV is now trading at a deep discount to its IPO price.FGV has clarified that there has been no discussion on a privatization at their Board Level.However, with the Malaysian Election coming up, this made us think a little deeper. What could be the rationale for a FGV privatization?

There has been recent news of a possible privatization for Felda Global Ventures (FGV MK).FGV is now trading at a deep discount to its IPO price.FGV has clarified that there has been no discussion on a privatization at their Board Level.However, with the Malaysian Election coming up, this made us think a little deeper. What could be the rationale for a FGV privatization? 

Felda (FGV MK):  Can a Privatization Help Tie up Loose Ends?

Chief Economist & Political Strategist, CrossASEAN Research

Prasenjit K. Basu

Chief Economist & Political Strategist

REAL-Economics.com

Equity Bottom-Up

The 173% premium reportedly being offered by FELDA Global Ventures (FGV) for a 37% stake in Eagle High Plantations has many hallmarks of the opaque financial developments prior to the May 2013 General Election in Malaysia. Political risk related to the transaction is extremely high, and investors need to exercise great caution when looking at the implications of this transaction. In 2013, 1MDB (1Malaysia Development Bhd.) raised about US$6bn through bond issues (carrying coupons of about 4%) for…

The 173% premium reportedly being offered by FELDA Global Ventures (FGV) for a 37% stake in Eagle High Plantations has many hallmarks of the opaque financial developments prior to the May 2013 General Election in Malaysia. Political risk related to the transaction is extremely high, and investors need to exercise great caution when looking at the implications of this transaction. In 2013, 1MDB (1Malaysia Development Bhd.) raised about US$6bn through bond issues (carrying coupons of about 4%) for…

Eagle High-FELDA Has Political Risk Stamped All over It

ASEAN Insight Provider, CrossASEAN Research

Angus Mackintosh

ASEAN Insight Provider

Eagle High Plantations / Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/4421" target="_blank" data-smartkarma-citation="entities:4421:1">Eagle High Plantations Tbk P (BWPT IJ)</a> announced another set of positive production figure for November, further confirming the strong recovery in its palm oil production and the return to the long-term growth trend. Production hit 178,000 tons for November versus 173,000 tons in October. Indications suggest that EBITDA should also be positive, at around 50% of the 9M16 number in just one month. December should also be a decent production number, further underlining the positive outlook for the…

Eagle High Plantations Tbk P (BWPT IJ) announced another set of positive production figure for November, further confirming the strong recovery in its palm oil production and the return to the long-term growth trend. Production hit 178,000 tons for November versus 173,000 tons in October. Indications suggest that EBITDA should also be positive, at around 50% of the 9M16 number in just one month. December should also be a decent production number, further underlining the positive outlook for the…

Eagle High Plantations - November Production Even Higher and Felda Steps In - Company Update

A foray through Jakarta "macet" to meet with <a href="https://www.smartkarma.com/entities/4421" target="_blank" data-smartkarma-citation="entities:4421:1">Eagle High Plantations Tbk P (BWPT IJ)</a> management for lunch in the traffic blackspot of Mega Kuningan, was a worthwhile adventure, revealing a company on the cusp of a new growth phase, after a period of M&amp;A indigestion. Eagle High is the result of a merger between BW Plantations and Rajawali Group's palm oil (CPO) plantations. It has been fraught with concerns over corporate governance and asset quality.  <a href="https://www.smartkarma.com/entities/2200" target="_blank" data-smartkarma-citation="entities:2200:1">Felda Global Ventures (FGV MK)</a> of Malaysia has also been put forward as a potential suitor but has stayed in the wings, possibly waiting for Rajawali to be a forced seller (though interestingly Rajawali Group has been a buyer of late). From an operational point of view, the combined entity is back on an even keel, with production about to hit record highs. 1Q16 was hit by unusual weather conditions but production doubled over the last three months, as a large portion of its plantations (85%-90%) have just hit the start of the production sweet spot (7 years average age).  2016 will also mark the end of the investment phase for the company. It should turn FCF positive in 4Q16 and debt can start to be paid down. There is now room for the company to focus on improving operational efficiencies. Global production of palm oil is forecast top grow +0%-3% this year, with demand growth at +4%. This should be supportive for CPO pricing. Before the merger with Rajawali's plantations, BW Plantations was 70% owned by foreign institutions, it now has very few institutional shareholders and is not covered by any major brokers. Given that the company is on the verge of multi-year productions breakout, it must be worth examining as a recovery story. Currently, the stock is trading at &lt;1x PBV , with a long-term normalized ROE of 16-17%.

A foray through Jakarta "macet" to meet with Eagle High Plantations Tbk P (BWPT IJ) management for lunch in the traffic blackspot of Mega Kuningan, was a worthwhile adventure, revealing a company on the cusp of a new growth phase, after a period of M&amp;A indigestion. Eagle High is the result of a merger between BW Plantations and Rajawali Group's palm oil (CPO) plantations. It has been fraught with concerns over corporate governance and asset quality.  Felda Global Ventures (FGV MK) of Malaysia has also been put forward as a potential suitor but has stayed in the wings, possibly waiting for Rajawali to be a forced seller (though interestingly Rajawali Group has been a buyer of late). From an operational point of view, the combined entity is back on an even keel, with production about to hit record highs. 1Q16 was hit by unusual weather conditions but production doubled over the last three months, as a large portion of its plantations (85%-90%) have just hit the start of the production sweet spot (7 years average age).  2016 will also mark the end of the investment phase for the company. It should turn FCF positive in 4Q16 and debt can start to be paid down. There is now room for the company to focus on improving operational efficiencies. Global production of palm oil is forecast top grow +0%-3% this year, with demand growth at +4%. This should be supportive for CPO pricing. Before the merger with Rajawali's plantations, BW Plantations was 70% owned by foreign institutions, it now has very few institutional shareholders and is not covered by any major brokers. Given that the company is on the verge of multi-year productions breakout, it must be worth examining as a recovery story. Currently, the stock is trading at &lt;1x PBV , with a long-term normalized ROE of 16-17%.

Eagle High Plantations - Blind Spot - On the Ground in J -Town

Malaysia

FGV Holdings Bhd is an agricultural and agri-commodities company. The Company owns and operates an oil palm plantation producing oil palm and rubber plantation products, soybean and canola products, oleochemial products and sugar products.

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FGV Holdings Bhd (FGV MK)

FGV Holdings: Reading the Palm Fronds

The government has agreed that the financial position of FELDA is untenable and that the terms of the LLA are unsatisfactory. I don't see how the...

David Blennerhassett

Felda (FGV MK): Can a Privatization Help Tie up Loose Ends?

There has been recent news of a possible privatization for Felda Global Ventures (FGV MK).FGV is now trading at a deep discount to its IPO...

Crispin Francis

Eagle High-FELDA Has Political Risk Stamped All over It

The 173% premium reportedly being offered by FELDA Global Ventures (FGV) for a 37% stake in Eagle High Plantations has many hallmarks of the opaque...

Prasenjit K. Basu

Eagle High Plantations - November Production Even Higher and Felda Steps In - Company Update

Eagle High Plantations Tbk P (BWPT IJ) announced another set of positive production figure for November, further confirming the strong recovery in...

Angus Mackintosh

Eagle High Plantations - Blind Spot - On the Ground in J -Town

A foray through Jakarta "macet" to meet with Eagle High Plantations Tbk P (BWPT IJ) management for lunch in the traffic blackspot of Mega Kuningan,...

Angus Mackintosh

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