Kencana Agri enters deal to sell plantation land for development

Palm fruit bunches. Photo by Mike Stezycki on UnsplashPalm fruit bunches. Photo by Mike Stezycki on Unsplash

Kencana Agri‘s wholly owned subsidiary PT Agro Sawitmas Lestari (ASML) has entered into a non-binding memorandum of understanding (MOU) to dispose of around 2,600 hectares of plantation land to unrelated third parties, the palm-oil plantation company said in a filing to SGX Monday. 

The unrelated third parties, PT North Kalimantan Battery Material (NKBM) and PT Kalimantan Industrial Park Indonesia (KIPI), plan to develop an industrial park in the North Kalimantan area, with NKBM set to be a major tenant, the filing said. 

“The said plantation land owned by ASML has been underperforming for several years. The proposed disposal is aligned with the intention of the management of the company to keep the group’s profitable core business in focus and avoid a deterioration in the value of the group’s assets,” Kencana Agri said. 

If a deal materializes this year, it may have a positive impact on earnings per share for 2022, the filing said.

The MOU, which will be valid for four months, is to facilitate due diligence and negotiations, Kencana Agri said. 

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