Priceworth Acquires Sabah Logging Firm (FMU 5) For RM260 Million

File photo of a logging operation at an undisclosed area in Sabah.
File photo of a logging operation at an undisclosed area in Sabah.

KUALA LUMPUR – Timber and sustainable forest management group Priceworth International Bhd is acquiring logging and replanting rights of over 101,161 ha in Sabah, an area which is expected to yield some 6.5 million cubic metres of renewable timber over the next 81 years.

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Priceworth’s wholly-owned Singapore subsidiary GSR Pte Ltd Wednesday signed an agreement to acquire the entire paid-up share capital of Rumpun Capaian Sdn Bhd from Transkripsi Pintar Sdn Bhd for RM260 million, it said in an announcement to Bursa Malaysia.

Rumpun owns 99.9 per cent of Anika Desiran Sdn Bhd (ADSB), which was awarded a 100-year licence in 1997 over an area known as Forest Management Unit 5 (FMU5) located in Trus Madi, Sabah.

The 101,161 ha area is for use as Industrial Tree Plantation (ITP) and Natural Forest Management (NFM), with about 12,200 ha to be returned to the Forestry Department Sabah as conservation area and 9,152 ha as forest reserves, Priceworth said in a statement.

Under the Sustainable Forest Management Licence Agreement (SFMLA), ADSB is to plant, rehabilitate and harvest forests under the principles of sustainable forest management and environmental conservation for economic, environmental and social purposes.

logging1Under a Log Extraction and Timber Sale Agreement, ADSB has agreed for Sinora Sdn Bhd, another Priceworth subsidiary, to extract commercial logs and merchantable timber in the Licenced Area in keeping with sustainable forestry management methods.

The estimated volume of harvestable timber with diameter at breast height of 40 cm and above is 3.63 million cubic metres in the ITP, and 2.88 million cubic metres in the NFM.

Sinora as contractor must replant the Licensed Area with trees of approved species and implement the objectives of the SFMLA and the new Forestry Management Plan (FMP) as well as comply with the terms and conditions imposed by the authorities.

Funding for the proposed acquisition will be via a private placement, a special issue and IPO Proceeds or cash from internally generated funds and borrowings. The company is also planning to raise funds via a proposed merger of its subsidiary GSR with FMU5 for a proposed listing on the Singapore Exchange.

If GSR is not listed, payment to Transkripsi would consist of RM240 million cash in two tranches. If GSR is listed, payment would comprise RM180 million cash and RM60 million worth of shares in GSR.

Priceworth also intends to make at least 20 percent of GSR’s shares available to the public to raise proceeds of about RM200 million.