PARLIAMENT | The Finance Ministry had agreed to provide a government guarantee to the Armed Forces Fund Board (LTAT) to buy out Boustead Plantations Bhd (BPlant).
Defence Minister Mohamad Hasan assured the Dewan Rakyat today that the government’s decision to guarantee LTAT’s RM2 billion loan was a cabinet decision.
“LTAT had announced that it would propose a general offer on all BPlant shares, to ensure that the latter preserves the principle of equality as well as protecting the stability and integrity of the Malaysian capital market.
“The rationale behind the general offer is to give LTAT the autonomy and flexibility to determine strategic direction and increased performance, carry out value-increasing activities to maximise BPlant’s potential, and strengthen BPlant’s financial position beyond Boustead Group,” he said.
LTAT is a major stakeholder in BPlant and its parent company, Boustead Holdings Bhd (BHB). LTAT is a statutory body that operates a pension scheme for the armed forces.
BPlant’s acquisition by LTAT made the news several days ago whereby the latter had made an offer price of RM1.55 per share.
This announcement followed a collapse in a deal between LTAT and BPlant with Kuala Lumpur Kepong Bhd (KLK) on Oct 4.
KLK had proposed to acquire 739.20 million shares, or a 33 percent stake and one share of BPlant from BHB for RM1.15 billion.
KLK also proposed a mandatory takeover offer to acquire all the remaining BPlant shares not already owned by KLK, BHB and LTAT resulting from the proposed acquisition at RM1.55 per BPlant share.
The offer price values BPlant at RM3.47 billion.
In a statement on Sept 11, KLK announced that the parties involved had agreed to extend the cut-off date to Sept 22. Subsequently, the date was further extended to Oct 6, 2023.
On Oct 4, BPlant and KLK said that the condition precedent under the strategic collaboration agreement (SCA) will not be satisfied by the Oct 6 cut-off date.
Hasan today said that the termination of KLK’s acquisition deal was a mutual commercial decision to take into account LTAT’s strategic importance.
At a press conference later, Hasan stressed that the government's move was in no way a "bailout".
"This is not a bailout. Bail-out is meant for companies that are already insolvent. LTAT is very strong, it has a lot of money.
"It is just because we want to expedite the process from the commercial bank with a government guarantee and furthermore (resulting) in cheaper interest rates," he said.
During the September Dewan Rakyat meeting, opposition MPs urged Putrajaya not to allow BPlant to sell its assets to KLK, which they deemed as a non-Bumiputera company.
They argued that BPlant owns a large number of land plots in the country which should either be kept within LTAT's possession or be sold off to other bumiputera corporations instead of non-bumiputera entities like KLK.
In response, Hasan told the Dewan Rakyat that there were 15 parties invited to bid for BPlant's shares, but most of them made low offers.
Earlier this year, LTAT took Boustead Holdings private as part of a debt-restructuring exercise.
Asked if the government's decision was over the opposition MPs' grievances, Hasan responded that it was due to various reasons "on the company's basis" where the best decision was chosen.
However, he said that a restructuring in BPlant was to carve out parcels of land to be sold at a high price.
"We want to get the highest return for our contributors. If we can get a lot of revenue, why not? We sell high, we buy low,” he added.
LTAT has been facing a slew of problems this year. It was forced to sell off a major stake in Boustead Naval Shipyard Sdn Bhd (BNS) to the Finance Ministry for RM1.
Its other key asset, Pharmaniaga Bhd, was dealing with Practice Note 17 (PN17) status, which indicated that it was in financial distress.
Hasan told the Dewan Rakyat that Boustead Group’s financial issues put them in a RM6.8 billion debt. - Mkini
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