Sime Darby Plantation completes sale of Liberia operations
PETALING JAYA: Sime Darby Plantation Investment (Liberia) Pte Ltd, a wholly-owned subsidiary of Sime Darby Plantation Bhd (SDP), has fully disposed of Sime Darby Plantation (Liberia) Inc.
The disposal of 100% equity interest to Mano Palm Oil Industries Ltd was completed on Wednesday for a cash consideration of US$1, plus an earn-out payment to be determined by the average future crude palm oil (CPO) price and future CPO production of SDP Liberia in 2022.
The earn-out consideration will be payable quarterly over a period of eight years, commencing from April 2023.
SDP said in a Bursa Malaysia filing yesterday that this is pursuant to the sale and purchase agreement entered into between SDP Investment (Liberia) and Mano Palm Oil on Dec 12 last year.
SDP Liberia ceased to be an indirect subsidiary of SDP following the disposal.
It is a private limited company incorporated in Liberia in 2009. It is principally engaged in the cultivation of oil palm and has planted a total of 10,300ha to date.
SDP said it will continue to serve its business to business and business to customer multinational customers in Africa.
SDP group managing director Mohamad Helmy Othman Basha said the terms and conditions of the asset sale were agreed with the buyer considering, among others, SDP’s cash outflows and SDP Liberia’s continuous loss-making state since its inception.
In 2018 and 2019, it registered operational losses of US$19mil and US$16mil respectively, even before asset impairment. It has only managed to plant on just over 10,300ha since 2009 in spite of a 63-year concession that was given to develop 220,000ha, due to various operating challenges.
“As part of the consideration of the sale, the earn-out payment constitutes a continuing potential income for SDP even after SDP Liberia ceases to be a subsidiary of the group.
“But more importantly, this divestment will enable us to prevent further losses in our books and reallocate our financial resources into areas where they will create the highest value for the group and its shareholders,” he said.
All current businesses of SDP Liberia will continue as-is and there will be no redundancy of existing employees.
Mano Palm Oil is also expected to continue honouring all contractual obligations with the local communities.
Mano Palm Oil is involved in the purchase of CPO and exporting it to various destinations across West Africa.
It is a wholly-owned subsidiary of Mano Manufacturing Co, which is principally involved in the manufacturing of soap, bleach and detergents.