Boustead mulling options, including sale, for palm oil unit

 

Boustead Holdings is said to be reinventing itself amid difficulties that predate the pandemic.

KUALA LUMPUR: Boustead Holdings Bhd is weighing options for its listed palm oil subsidiary including a sale, people with knowledge of the matter said.

The parent of Boustead Plantations Bhd is working with an adviser on the potential options, the people said, asking not to be named as the information is private. A plan could be implemented as soon as the next few weeks.

The holding company, which owns 57.4% of the subsidiary, could sell the unit or lease the plantations to third parties, the people said. Another option is to sell the individual plantations separately, one of them said.

Boustead Holdings shares climbed as much as 5.3% following the Bloomberg News report, their highest intraday level in a week. Shares in Boustead Plantations rose as much as 1.8%, giving the unit a market value of about RM1.3 billion.

Armed forces pension fund Lembaga Tabung Angkatan Tentera, the majority shareholder of Boustead Holdings, owns 12.1% of the plantation unit, according to data compiled by Bloomberg.

Deliberations are ongoing and Boustead Holdings could decide not to proceed with a sale, the people said.

Boustead Holdings does not have immediate plans to pare down its stake in Boustead Plantations, a spokesman said in response to a Bloomberg News query.

Boustead Plantations is a core contributor to the group’s performance. However, the company is continuously on the lookout to unlock value within the group, they said.

Restructuring challenges

The potential sale comes as Boustead Holdings is attempting to reinvent itself amid difficulties that predate the Covid-19 pandemic, including debt totalling almost RM7.5 billion, according to its earnings statement for the quarter ended March 31.

Its shares tumbled in February after LTAT announced it would not proceed with a take-private proposal for Boustead, citing economic challenges from the pandemic.

The restructuring plan by one of Malaysia’s oldest conglomerates, which traces its roots to 1828, included a pledge to dispose of non-strategic assets.

Palm oil prices are up 3.7% this year after touching an all-time high in May. Palm oil planter Kuala Lumpur Kepong Bhd last month offered to buy a controlling stake in smaller rival IJM Plantations Bhd for RM1.5 billion.

Boustead Plantations owns and leases 48 oil palm plantation estates and 10 palm oil mills in Malaysia, according to its website. Its land bank consists of more than 98,200ha, of which 79,400ha are used for oil palm cultivation.

The unit’s CEO, Ibrahim Abdul Majid, resigned in order to join Boustead Holdings, according to an exchange filing yesterday. Ibrahim will lead the company’s plantation technology and innovation initiatives. - FMT