Strategic Investment in REA Kaltim
JAKARTA, 16 MAY 2016 -- DSN is pleased to announce that it has reached a conditional agreement with R.E.A. Holdings plc ("REA"), a UK-listed company. Under which agreement, PT Swakarsa Sinarsentosa, ("SWA"), a wholly owned subsidiary of DSN, will acquire a 15 per cent investment in the company's principal operating subsidiary in Indonesia, PT REA Kaltim Plantations ("REA Kaltim").
REA Kaltim and its subsidiaries are principally engaged in the cultivation of oil palm in East Kalimantan and in the production of crude palm oil and crude palm kernel oil. As at 31 December 2015, REA Kaltim and its subsidiaries have a total palm oil planted area of 37,097 hectares and fully titled (HGU) land of 70,584 hectares.
The conditional agreement (the "Master Agreement") with REA Kaltim proposes that SWA should:
1. acquire 650 outstanding class B shares in the capital of REA Kaltim, representing 5 percent of the current issued share capital, and subscribe a further 1,530 class B shares in the capital of REA Kaltim, so as to bring its total shareholding in REA Kaltim to 2,180 shares, representing 15 per cent of the enlarged issued share capital of REA Kaltim; and
2. provide loans to REA Kaltim and its subsidiaries in amounts equal to 15/85ths of the aggregate principal amounts borrowed by REA Kaltim and its subsidiaries from REA and its wholly owned subsidiary, R.E.A. Services Limited.
These proposals will result in SWA holding in total 15 per cent of the enlarged issued share capital of REA Kaltim and 15 per cent of the enlarged aggregate principal amount of shareholder loans to REA Kaltim and its subsidiaries. The proceeds of the transaction will be utilized, inter alia, for the repayment of debt, advancing to subsidiaries and working capital.
The total value for the shares to be purchased and to be subscribed will depend on the aggregate number of hectares planted by REA Kaltim and its subsidiaries, as well as on REA Kaltim's net current assets and total borrowings from REA and REAS, as at the close of business on 30 June 2016 and is expected to amount to some US$16.8 million
Subject to completion of due diligence, formal documentation and all necessary approvals, the above arrangements will complete on or before 31 October 2016.
In addition, DSN has agreed that it will, on or before 10 June 2016, lend to REA Kaltim the sum of US$10 million by way of a pre completion advance. The pre completion advance will be repayable on completion of the proposed investment (in which event it will be set off against the monies otherwise due to be lent by SWA).
REA Kaltim currently has in issue a total of 13,000 shares, comprising 12,350 class A shares and 650 class B shares. Each class of shares in REA Kaltim holds the same terms and rights. Gross assets of REA Kaltim and its subsidiaries, as included in the consolidated REA group financial statements as at 31 December 2015, amounted to US$577.8 million and the profit before tax attributable to REA Kaltim and its subsidiaries, as included in those financial statements for the year ended 31 December 2015, amounted to US$4.2 million.
Both parties have acknowledged the intention of DSN to increase its participation in REA Kaltim to an eventual level of 49 per cent by gradual stages over a period of five years, but on the basis that each increase will be subject to agreement of the price and other terms at the time of that increase and to the receipt of all necessary consents and approvals.
The directors believe that the proposed investment in and joint venture with REA Kaltim will bring significant mutual benefits in terms of opportunities for more efficient sourcing of supplies and marketing through exchanges of information on agronomic practices.
DSN will provide an update on progress regarding the proposal in due course.
ABOUT PT DHARMA SATYA NUSANTARA Tbk
PT Dharma Satya Nusantara Tbk (DSN Group) was established on September 29, 1980. DSN Group is engaged in the palm oil industry and wood products. Currently, the Company has oil palm plantations which located in East, Central and West Kalimantan. In the wood product industry, the Company has a wood-processing plant in East Java and Central Java, which manufactures wood panels, engineered door and engineered flooring.
PT Dharma Satya Nusantara Tbk
Jl. Rawa Gelam V Kav. OR/3B
Kawasan Industri Pulogadung
Jakarta 13930, Indonesia