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KUALA LUMPUR: FGV Holdings Bhd
Today he reiterated that he has not yet received a written notice from the Federal Land Development Authority (FELDA) regarding the termination of the land lease agreement (LLA), but has prepared his businesses and operations for this eventuality.
In a statement, FGV said that once it receives an official notice from FELDA as required by the LLA, it will follow the procedures outlined in the LLA to initiate the termination process and determine the compensation due to FGV, which will take 18 months to complete. .
“As the termination of LLA had always been a highly talked about scenario, FGV has already prepared its businesses and operations for this eventuality,” said the country’s largest crude palm oil producer.
Yesterday, the Minister of the Prime Minister’s Department (Economy), Datuk Seri Mustapa Mohamed, said in a statement that the termination of the LLA and the issuance of a sukuk worth RM9.9 billion by FELDA were some of the proposals approved by the Cabinet to ensure recovery.
FGV said its overall long-term strategy, which is to continue to grow and strengthen its high-value-added business activities focused on branded food and consumer products, remains intact and could be accelerated to provide higher expected returns to shareholders as a result of the Termination of LLA.
“FGV will look after the interests of FGV shareholders at all times and we will make the relevant announcements in a timely manner in the event of a material development in this matter,” the company said.
The LLA refers to farms owned by FELDA for a total of 350,733 hectares that were leased to FGV for 99 years as of November 1, 2011.
According to FGV, the expected compensation amount owed to the company as a result of the termination of LLA may range from RM3.5 billion to RM4.3 billion based on an internal assessment that will vary based on FGV’s financial performance for 2020 and 2021 and several others. factors.
FGV assured that its plantation supply chain remains intact as LLA farms only account for 30 percent of the fresh fruit bunches (FFB) that are processed in the group’s 68 palm oil plants.
“Due to the proximity of the palm oil mill locations to the LLA farms, we do not anticipate any changes to RFF’s current supply agreement.
“The rest of FGV’s integrated value chain of plantations in the midstream and downstream businesses will remain uninterrupted by the LLA termination exercise,” he added. – Bernama
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