Monday, October 3, 2011

Wijaya Global's RM255.2m venture into Indonesia's timber sector

KUALA LUMPUR: WIJAYA BARU GLOBAL BHD [] is making its foray into Indonesia's logging sector with the proposed acquisition of two companies for US$80 million or RM255.2 million which have logging rights and if all turns out well, it would see the company later venturing into oil palm cultivation.

Wijaya Baru said on Monday, Oct 3 it had entered a conditional share sale agreement to acquire Suffolk Pte Ltd for US$40 million from Adwir Boy. It had also proposed to acquire Wealthgate Pte Ltd from Hafiz Arief for US$40 million also.

It said Suffolk was a joint venture partner with PT Trimegah Karya Utama to extract and sell timber covering 40,000 ha in Jair, Boven Digoel, Papua.

As for Wealthgate, it had teamed up with PT Manunggal Sukses Mandiri to extract and sell timber at a proposed site in Jair, which covered 40,000 ha.

Wijaya Global said the US$80.0 million purchase price was based on the total market value of the PROPERTIES [] of about RM296 million, and a discount of 4.2% or RM11.2 million to the 90% of total market value of the properties of about RM266.4 million.

'Apart from the total purchase consideration, the company will be required to utilise approximately RM20 million to RM30 million to put the subject properties on-stream. The financial commitment to put the subject properties on-stream will be funded by internal generated funds, bank borrowings and/or fund raising exercises,' it said.

On the rationale, it said its last timber licence expired on July 9, 2010. Due to revenue loss from the timber division and the board's intention to maintain its core business in timber extraction, the proposed acquisitions would provide an immediate and stable income stream for its core business and at the same time allow the group to expand its business regionally.

'The proposed acquisitions will also present an opportunity for the group to venture into oil palm cultivation business in the future, if the group so decide to. The board may at much later stage enter into joint venture alliance with an experienced oil palm PLANTATION [] company to jointly develop part of the subject properties for oil palm cultivation purposes,' it said.


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