KUALA LUMPUR, July 16 (Bernama) -- Boustead Holdings Bhd has proposed to privatize Al-Hadharah Boustead Real Estate Investment Trust (Boustead REIT) to list an enlarged Boustead Plantations Bhd (BPB) on Bursa Malaysia.
In a statement today, Boustead said the exercise aimed to unlock value and consolidate its plantation business which was currently undertaken via its wholly-owned unit, BPB, and its 53.6 per cent-owned Boustead REIT.
"The proposed privatisation is expected to be a landmark transaction for Malaysia's capital market given that it will be the maiden privatisation of a REIT," it said.
It said the privatisation will be undertaken via a proposed selective unit redemption and repayment exercise which involved the redemption of all the units in Boustead REIT held by the unit holders, except for the units held by BPB, and the corresponding cash repayment to unit holders.
Boustead said the unit holders, except for BPB, will be offered a cash repayment and a special dividend amounting to a total of RM2.10 per unit, representing a premium of 16.7 per cent over the net asset value of Boustead REIT as at March 31 of RM1.80 per unit.
The price also represented a premium of 13.5 per cent above Boustead REIT's five-day volume weighted average price of RM1.85 as at July 12, the last trading day of the REIT's units prior to the suspension, it said.
Subsequently, it said, Boustead REIT will be converted from a collective investment scheme to a private property trust with BPB as the sole beneficiary.
Nevertheless, the proposed redemption and repayment exercise will be subjected to regulatory approvals and Boustead REIT's unit holders' approval at an extraordinary general meeting to be convened.
Meanwhile, Boustead Deputy Chairman/Group Managing Director, Tan Sri Lodin Wok Kamaruddin, said the proposed corporate exercise was undertaken at the right time and for the right reasons.
"Today, we are faced with a shortage of mature plantation land with prime yielding trees, and current market prices for such assets are high which give rise to the challenge of sustaining the expected yield for a REIT.
"This is supplemented by the high dividend distribution made by Boustead REIT which does not allow us to retain sufficient internal funds to engage in growth strategies.
"Indeed, these factors provide us with a timely justification to undertake this privatisation exercise," he said.
Lodin said the company intended to consolidate its plantation assets under BPB while achieving economies of scale and business synergies in its operations.
He said the corporate exercise will allow the long-term unit holders of Boustead REIT, especially minorities, the opportunity to realise their investments at an attractive premium.
Boustead REIT, listed on the Main Market of Bursa Malaysia in 2007, is the first and only Islamic plantation REIT in Malaysia. It has a plantation asset value of RM1.3 billion and market capitalisation of RM1.2 billion.
It owned 12 oil palm plantations and three palm oil mills which are located in Peninsular Malaysia, except for the Sutera Estate, which is located in Sabah. -- BERNAMA