FGV financials intact, says Emir

KUALA LUMPUR: Felda Global Ventures Holdings Bhd (FGV) has assured shareholders that the company's financial health remains intact despite its acquisition spree, the latest being the RM2.8 billion deals with Indonesia's Rajawali Group, and falling earnings.

The FGV board came under scrutiny from its shareholders during a 6-hour annual general meeting yesterday. The long drawn meeting was also due to initial dissatisfaction over the increment in directors' fees to RM2.09 million in 2014 from RM2.04 million in 2013.

A couple of minority shareholders told Business Times that they were worried with the group's overall financial health and ability to pay out dividends.

Since its listing on Bursa Malaysia in June 2012, FGV had been on the acquisition trail. Among the major acquisitions are the takeover of Pontian United Plantations Bhd for RM1.2 billion and Asia Plantation Ltd for RM628 million.

It also spent RM2.2 billion to buy the remaining 51 per cent stake in Felda Holdings Bhd from its substantial shareholder Koperasi Permodalan Felda Malaysia Bhd in October 2013. Felda Holdings owns the upstream assets.

Earlier this month, FGV announced purchase of 9,800ha oil palm land from Golden Land Bhd for RM655 million cash.

Group president and chief executive officer Datuk Mohd Emir Mavani Abdullah, however, assured the RM2.8 billion acquisition into Rajawali's plantation arm would not burden FGV's financials.

FGV is buying Rajawali Group's 37 per cent stake in PT Eagle High Plantations Tbk for RM2.54 billion and its sugar assets, which consists of 47,745ha in Indonesia's Papua province for RM251 million.

"FGV will definitely need to raise funds for this deal. We'll structure in a way that it won't burden us," Emir told reporters after the company's annual general meeting here yesterday. 

"FGV can afford this deal and continue to pay dividends to shareholders. We're keeping to our dividend policy of paying out at least 50 per cent of our net profits," he added.

FGV will pay US$174.5 million as a deposit for the proposed acquisitions. Emir said the deposit is fully refundable, should the deals fail to materialise.

He reiterated the acquisition of Rajawali Group's oil palm and sugar business would be a strategic fit to FGV's expansion plans.

"FGV is already in Indonesia and this planned partnership with Rajawali Group's subsidiaries will boost our presence there. FGV will soon open up a fertiliser facility in Indonesia," he said.

Emir said FGV may consider a controlling stake in Eagle High Plantations. "We're thinking about it but right now, we're in a process of doing a thorough due diligence. Then there is the extraordinary general meeting to be called to vote on this deal.

"We have not crossed the bridge yet. Let's wait for the process to run its due course," he said, adding the due diligence to be completed in one month.

Emir reiterated that FGV intends to sell its Canadian downstream operations in the next few months. “We have got some bidders; I can’t disclose who they are. It is in the interest of FGV to divest all non-performing and non-core assets,” he said.

Emir was appointed to his position in July 15, 2013 under a 2-year contract with an option to extend another year. When asked if his employment contract would be renewed, he replied: "It is being discussed by the board of FGV."