Indonesian firm in $1.3 billion palm plantation bid

SINGAPORE/JAKARTA Thu Oct 18, 2012 12:40am EDT

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SINGAPORE/JAKARTA (Reuters) - An Indonesian businessman is leading a bid to buy one of the country's largest palm oil plantations in a deal worth up to $1.3 billion, documents detailing the transaction show.

If completed, the deal would be among the largest for the sector in Asia for several years.

The deal, codenamed Project Thor, is currently at the closing stage and is expected to be completed by next month, said a source with direct knowledge of the deal.

The company is also discussing a debt financing scheme with several Indonesian and Singaporean banks, another source familiar with the negotiations told Reuters.

Businessman Alexander Thaslim, president director of unlisted investment vehicle PT Borneo Pacific, has been negotiating since 2011 to buy the 83,879 hectares (209,700 acres) spread across 36 plantations in Riau province opposite Singapore on Sumatra island.

The purchase would be funded mostly through loans, two sources said, with about $300 million already raised in equity. No further details were available on the equity portion.

Reuters obtained several investor presentations, one of which describes the plantation cluster as the largest contiguous plantation concession in Indonesia. In total, the area is larger than the island of Singapore.

A third source with knowledge of the deal confirmed that PT Borneo Pacific is in the process of acquiring the plantations and arranging financing.

Thaslim, through his lawyer, said he was not immediately available to discuss the deal.

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Malaysia's TH Plantations (THPB.KL) owns 95 percent of the Riau plantations and in April this year signed a conditional share purchase agreement with PT Borneo, the presentations show.

TH Plantations could not be reached for comment.

A total of 73,650 ha of the estate area has been planted. Other assets include six mills, a kernel crushing plant and biomass power plant.

Credit Suisse is financial advisor for the deal.

The bank said PT Borneo would buy TH Plantation's 95 percent stake for $910 million and is expecting to buy the remaining 5 percent owned by PT Primasakti Rizki Pertiwi.

"Including other transaction related expenses, the total purchase consideration is expected to be up to US$1.3 billion," a Credit Suisse investor presentation says.

The bank says Thaslim is the majority owner of PT Borneo Pacific and is involved in the holding of palm oil firms.

PT Borneo Pacific is a coal trader and miner.

Analysts said the deal would be among the largest palm oil asset acquisitions in recent years.

The deal was costlier than recent transactions by some listed firms, based on an enterprise value of nearly $16,000 per hectare and assuming no debt, said Ivy Ng, palm oil sector analyst for CIMB in Kuala Lumpur.

That was a positive sign for the market, said Ng, because it underscored demand for palm oil concessions, despite weaker crude palm oil prices, which have fallen 30 percent since April.

In 2007, palm oil giant Wilmar (WLIL.SI) completed a proposed S$4.1 billion deal to acquire Malaysia's PPB Oil Palms Berhad, Kuok Oils and Grains Pte Ltd and PGEO Group Sdn Bhd.

The same year, the plantation assets of Sime Darby, Kumpulan Guthrie and Golden Hope Plantations merged to create the world's largest listed palm-oil group worth $8.6 billion at the time.

(Additional reporting by Saeed Azhar in Singapore and Niluksi Koswanage in Kuala Lumpur, Editing by Jonathan Thatcher)

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