KUALA LUMPUR: The Forest Management Unit 5 (FMU5) timber concession in Sabah, for which Priceworth International Bhd is proposing to pay RM260 million, has been valued significantly higher, at RM433.8 million.
The Sandakan-based timber group said it also held a cash option that could further reduce the purchase price to RM235 million, if exercised.
The FMU5 timber concession comprises a net concession area of 88,920 hectares.
“Moving forward, our company estimates that the harvest from FMU5 will contribute not less than 70 per cent of the annual log supply for its downstream timber manufacturing business for the next ten years from the commencement of the logging activities,” Priceworth said in a statement.
The company is seeking shareholders’ approval at an extraordinary general meeting on May 22 to acquire FMU5, which is among Sabah’s top 10 largest forest management areas and has 79 years remaining on the 100-year licence to manage, extract and sell timber from the area.
It is also proposing a renounceable two-for-one rights issue with bonus shares to raise proceeds of about RM102.37 million, which will go towards repayment of bank borrowings and working capital.
Priceworth said the proposed acquisition of FMU5 would cement its position as the leading integrated timber player in Sabah, with an entire value chain comprising upstream and downstream assets complemented by its in-house expertise, know-how and market knowledge. — Bernama