R.E.A. Holdings plc: Sale of shareholding in PBJ

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 R.E.A. Holdings plc (RE.) 
R.E.A. Holdings plc: Sale of shareholding in PBJ 
 
25-Apr-2018 / 11:00 GMT/BST 
Dissemination of a Regulatory Announcement that contains inside information 
according to REGULATION (EU) No 596/2014 (MAR), transmitted by EQS Group. 
The issuer is solely responsible for the content of this announcement. 
 
  NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, DIRECTLY 
       OR INDIRECTLY, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD 
          CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF THAT 
                                                                JURISDICTION 
 
                               THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION 
 
                                                       FOR IMMEDIATE RELEASE 
 
                        R.E.A. Holdings plc ("REA") 
 
            Sale of shareholding in PT Putra Bongan Jaya ("PBJ") 
 
REA is pleased to announce that its subsidiary, PT REA Kaltim Plantations 
("REA Kaltim"), has entered into a conditional agreement for the sale of REA 
Kaltim's 95 per cent interest in PBJ to Kuala Lumpur Kepong Berhad ("KLK"). 
The agreement is conditional upon REA shareholder approval, necessary 
regulatory consents in Indonesia and the consent of REA Kaltim's lending 
bank. 
 
Highlights 
 
? The disposal enables the group to release the intrinsic value that has 
built up in developing PBJ, which, as a recently planted property, has 
excellent potential but is not currently profitable. 
 
? The sale is expected to realise gross proceeds of approximately $85 
million and net proceeds of approximately $57 million after repayment of 
external borrowings and net of selling expenses. 
 
? The divestment will benefit the group's capital structure by reducing 
indebtedness and by relieving the group of the further investment that 
would be required to take the PBJ estates to full maturity; it will also 
defer for at least three years the need for a further group oil mill. 
 
? The divestment will permit the group to focus its efforts on its 
remaining plantings which are concentrated within a single geographical 
area. 
 
? There will be no material negative impact on the immediate outlook for 
the REA group's financial performance. 
 
Details 
 
PBJ is an Indonesian company which owns an oil palm plantation located in 
the Kutai Barat Province of East Kalimantan. The plantation is based on a 
fully titled area (held under an Hak Guna Usaha) of 11,602 hectares and an 
additional land allocation subject to completion of titling (held under an 
Izin Lokasi) of 4,460 hectares. At completion of the sale, it is projected 
that 7,482 hectares of land will have been planted by PBJ for its own use, 
of which 810 hectares will be mature and the balance immature. A further 635 
hectares is projected to have been planted for smallholder schemes managed 
by PBJ for the benefit of local communities. 
 
The consideration, which is payable in cash, for the PBJ shares the subject 
of the sale will be 95 per cent of the value ascribed at completion to the 
underlying assets and liabilities of PBJ. For this purpose, the assets and 
liabilities of PBJ will be valued as follows: 
 
(a) land and plantings, plant and equipment and other non current assets 
(other than advances to cooperatives) at $80 million; 
 
(b) borrowings by PBJ from its lending bank at the principal amount 
outstanding at completion (together with accrued interest and any early 
repayment penalty); 
 
(c) amounts owing by PBJ to the REA group at the principal amount 
outstanding at completion (together with accrued interest but net of certain 
balances due from other REA group companies): and 
 
(d) working capital (taken to comprise current assets and liabilities (other 
than as included in (b) or (c) and deferred tax), plasma advances and 
employee benefit obligations. 
 
Had completion occurred at 31 December 2017, the aggregate of (a) to (d) 
above would have amounted to $24.4 million and the cash consideration for 
the 95 per cent shareholding in PBJ to $23.2 million. KLK is depositing with 
REA Kaltim, by way of an advance of the purchase price, the sum of $8 
million. Should the agreement for the sale of REA Kaltim's interest in PBJ 
not become unconditional, such amount will be repayable. 
 
As a term of the transaction, KLK has agreed that on completion of the sale 
it will repay the amounts owing at (b) and (c) above. The amount owing at 
(b) is projected to amount to approximately $26 million at completion. The 
net proceeds to the group will therefore comprise the consideration for the 
95 per cent shareholding in PBJ and the amount repaid in respect of (c) 
which are together expected to amount, net of expenses, to approximately $57 
million. 
 
Completion is not expected to occur before 31 August 2018 and the agreement 
will lapse if all conditions have not been satisfied prior to 31 January 
2019. Should the area planted by PBJ for its own use by the later of 
completion and 30 September 2018 fall short of the projected 7,482 hectares, 
any shortfall will result in a reduction of the value at (a) above by $8,000 
per hectare. The area currently planted by PBJ for its own use is estimated 
at 7,062 hectares. 
 
KLK has agreed that REA Kaltim may invite a small number of existing staff 
at PBJ to transfer to REA Kaltim's employment. KLK has also undertaken to 
procure that PBJ will offer continued employment to substantially all of 
PBJ's other employees. 
 
KLK has also agreed to the continued use by a subsidiary of REA of a small 
area of PBJ used by the subsidiary for crushing stone from the limestone 
quarry adjacent to PBJ in respect of which the subsidiary has an exclusive 
supply arrangement. KLK will procure that PBJ offers the subsidiary first 
refusal on all future contracts for the supply of stone to PBJ. 
 
The proceeds of the sale of the PBJ shares and the repayment of monies owed 
by PBJ to the REA group will be applied in reduction of REA group 
indebtedness. 
 
The gross assets of PBJ to be included in the REA group accounts at 31 
December 2017 will be $77.3 million and the net assets (after deduction of 
the 5 per cent non controlling shareholder interest) will be $51.2 million. 
Loss before tax so to be included will be $0.2 million. 
 
The sale of PBJ constitutes a class 1 transaction for REA under the 
Financial Conduct Authority's Listing Rules and, accordingly, a circular 
containing further information on the sale, together with a notice convening 
a general meeting, will be sent to REA shareholders in due course. 
 
Enquiries: 
 
David Blackett 
 
Chairman 
 
R.E.A. Holdings plc 
 
Tel: [phone] 
 
ISIN:          GB0002349065 
Category Code: DIS 
TIDM:          RE. 
LEI Code:      213800YXL94R94RYG150 
Sequence No.:  5456 
 
End of Announcement EQS News Service 
 
678909 25-Apr-2018 
 
 

(END) Dow Jones Newswires

April 25, 2018 06:04 ET (10:04 GMT)