The agreements were with Suffolk Pte Ltd and Wealthgate Pte Ltd for US$40mil cash each in total. Wijaya Baru said its last timber licence expired on July 9, 2010, and the acquisition was done in view of the loss of revenue from the timber division and the intention to maintain its core business of timber extraction.
“The proposed acquisition will provide an immediate and stable income stream for its core business and, at the same, time allow the group to expand its business regionally,” it said in a filing with Bursa Malaysia.
Wijaya Baru said the land, which was in the process of receiving its approvals of conversion into oil palm estates from Indonesian authorities, could in the future become another income stream for the group should it proceed with planting oil palm crop.
It also has the option of selling the land should it decide against venturing into plantations.
Suffolk and Wealthgate had both on Aug 24 signed and executed a joint-venture agreement with PT Trimegah Karya Utama and PT Manunggal Sukses Mandiri respectively, whereby both companies as joint venturers have been granted the exclusive rights to undertake the extraction and sale of timber from land located in Jair, Indonesia.
By The Star
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