TDM Berhad Signs HOA To Acquire 70% Shares In THP-YT Plantation Sdn Bhd

( – TDM Berhad (“TDM” or “Group”) wishes to announce that the Company had on 31 December 2019, entered into a Heads of Agreement (“HOA”) with TH Plantations Berhad (“THP”) for the acquisition of 70% shares in THP-YT Plantation Sdn Bhd (“THP-YT).

THP-YT is the registered owner of three parcels of plantation land located in Mukim of Caluk and Marang, all in the District of Setiu, State of Terengganu with a total land area of 2,594.50 hectares, known as Ladang Bukit Bidong (“Estate”). Of which, a total area of 2,307.00 hectares had been planted with oil palm plantation with an age profile ranging from two to nine years old.

The HOA will enable THP and TDM to negotiate and finalise the terms of the definitive agreement for the Proposed Share Sale Agreement (“SPA Shares”) and the Proposed Settlement Agreement (“Settlement Agreement”) (collectively referred to as the “Proposed Acquisition”). The SPA Shares and the Settlement Agreement will be executed between the Parties within eight (8) weeks after the execution of the HOA.
A detailed announcement on the Proposed Acquisition will be released upon signing of the SPA Shares and the Settlement Agreement. Upon completion of the Proposed Acquisition, THP-YT will be a subsidiary of TDM.

Since the Estate is located in close proximity to TDM existing plantations and its palm oil mill, the Proposed Acquisition would optimise TDM processing capacity and lower the mill processing cost/mt FFB at its Sungai Tong mill. The age profile of the Estate ranges from two to nine years. The Proposed Acquisition will improve TDM average age profile and contribute positively to TDM’s cashflow.

Upon completion of the acquisition, TDM’s total planted oil palm area in Terengganu will increase from 31,346 hectares to 33,653 hectares.

YM Raja Dato’ Haji Idris Raja Kamarudin, Chairman of TDM Berhad said, “looking further ahead, we are rolling out our Business Development Plan (“BDP”) to strengthen the platform for sustained growth into the future. The acquisition is part of the Group’s overall strategy to improve the average age profile and reduce fluctuation in revenue. TDM is strategically positioning itself to stay competitive in highly challenging market conditions.

TDM is also looking forward to the Securities Commission’s (“SC”) review in May 2020 and the potential reinstatement of TDM as a shariah compliant security. TDM believes that it has in principle complied with the SC’s requirements and now awaits for the outcome of an official review by the SC in May 2020.”

TDM will pay a consideration of RM7 million for the 70% THP’s shares in THP-YT. Through the proposed Settlement Agreement, the inter-company advances by THPYT to THP Suria Mekar Sdn. Bhd. (“THPSM”), a wholly-owned subsidiary of THP, amounting to RM78.6 million (“Advances”) will be settled via a bank facility to be taken by THP-YT and part of it will be paid using shareholders’ advances from TDM and/or Yayasan Terengganu amounting to RM62 million (“Settlement Sum”). The balance of the Advances, being the difference between the Advances and the Settlement Sum, shall be assigned by THPSM to the TDM for the consideration of RM1.00.

It is important to note that our wholly-owned subsidiary, namely TDM Plantation Sdn Bhd has been certified sustainable by the Roundtable on Sustainable Palm Oil (“RSPO”) and Malaysian Sustainable Palm Oil (“MSPO”). In 2013, we were the first plantation company in Terengganu to go beyond the standard practices at that time and had been awarded with the 100% RSPO Certification.

“TDM’s believes that the strategic value creation to be derived from the proposed acquisition will translate into operational efficiencies thus improving profitability in the long run,” concluded Y.M Raja Dato’ Haji Idris.