IslamicFinance.de

The Federal Land Development Authority is set to raise funds for its 37% stake acquisition in PT Eagle High Plantations Tbk via a mix of loans and sukuk issuance.
Sources familiar with the matter said that 50% of the acquisition figure of RM 2.26 bil would be financed through a loan with a major European banking group. The remaining funds will be raised through a sukuk issuance.
“The sukuk issuance could be announced as early as late January. The debt will be serviced by the cashflow generated by Felda Investment Corp’s (FIC) assets,” said a source. It is probable that the sukuk would come with an explicit government guarantee, given that Felda is a government-backed agency. This is because most institutional funds – which are the likeliest parties to subscribe to the sukuk – can only purchase high-rated bonds as part of their investment mandate. A guarantee would ensure that the bonds are rated at or close to the top investment grade.
Last week, Felda announced that its subsidiary FIC Properties Sdn Bhd is acquiring the stake in the Indonesian planter for US$505.4mil (RM2.26bil). The Rajawali Group, led by Indonesian billionaire tycoon Tan Sri Peter Sondakh, is the current majority owner in EHP.
The deal has been close to two years in the making and was initially between Eagle High and Felda Global Ventures Holdings Bhd (FGV).
The deal has raised questions over its viability and potential benefits for the Felda Group. The purchase price, which translates to about 580 rupiah per share, is considered a pricey deal compared to EHP’s share price in the open market. Felda defended the deal in a Dec 25 statement, saying that the offer price was justified by EHP’s massive land bank and potential collaboration and cross-selling opportunities in Indonesia.