Thursday, October 18, 2012

20121018 1344 Palm Oil Related News.

VEGOILS-Palm oil up on flood risk, economic data
Thu Oct 18, 2012 1:31am EDT
* Investors short-cover ahead of Muslim festival next week
    * Rainy season could trigger floods and hurt output -trader

    By Anuradha Raghu
    KUALA LUMPUR, Oct 18 (Reuters) - Malaysian palm oil futures
climbed on Thursday on emerging concerns of floods in key
growing regions curbing output and a slew of economic data from
the U.S. and China that showed global growth trends were intact.

    Palm oil futures, which have lost 21 percent so far this
year, also gained support from some investors shortcovering
ahead of the Islamic holiday of Eid al-Adha next week.
    "The market should continue to go higher. They are expecting
some floods because there's going to be rainy days ahead," said
a trader with a local commodities brokerage.
    "I'm expecting some short covering to take place either now
or next week -- next week it will be Hari Raya Haji," he said,
in reference to the Muslim holiday.
    By the midday break, the benchmark January contract
on the Bursa Malaysia Derivatives Exchange rose 1.1 percent to
2,499 ringgit ($822) per tonne.
    Total traded volumes stood at 14,592 lots of 25 tonnes each,
higher than the usual 12,500 lots as more traders hedged
    Floods could complicate logistics and harvesting in
Malaysia, the second largest producer, at a time when yields
have bounced back strongly after a weak first half in 2012.
    But the impact on output and stocks may be limited given
production hit a record in September, lifting stocks to an
all-time high in the same month.
    Palm oil futures also rose on gains in the U.S. soy complex,
said traders. Soybean futures extended gains in Asian trade on
Thursday, driven by bargain hunting after prices slid this week
to their lowest since late June.
    U.S. soyoil for December delivery climbed 0.6
percent. The most active January 2013 soybean oil contract
 on the Dalian Commodity Exchange rose 1.2 percent.
    Brent futures held above $113, buoyed by hopes for steady
growth in demand after China, the world's second-biggest oil
consumer, posted growth that met expectations, and simmering
tension in the Middle East provided additional support.
  Palm, soy and crude oil prices at 0457 GMT

Indonesian firm in $1.3 bln palm plantation bid
Thu Oct 18, 2012 12:37am EDT
* Deal would cover plantations, mills, other assets
* Would be among largest palm oil M&As for several years

* Deal expected to be completed by Nov -- source

By David Fogarty and Janeman Latul

SINGAPORE/JAKARTA, Oct 18 (Reuters) - An Indonesian businessman is leading a bid to buy one of the country's largest palm oil plantations in a deal worth up to $1.3 billion, documents detailing the transaction show.

If completed, the deal would be among the largest for the sector in Asia for several years.

The deal, codenamed Project Thor, is currently at the closing stage and is expected to be completed by next month, said a source with direct knowledge of the deal.

The company is also discussing a debt financing scheme with several Indonesian and Singaporean banks, another source familiar with the negotiations told Reuters.

Businessman Alexander Thaslim, president director of unlisted investment vehicle PT Borneo Pacific, has been negotiating since 2011 to buy the 83,879 hectares (209,700 acres) spread across 36 plantations in Riau province opposite Singapore on Sumatra island.

The purchase would be funded mostly through loans, two sources said, with about $300 million already raised in equity. No further details were available on the equity portion.

Reuters obtained several investor presentations, one of which describes the plantation cluster as the largest contiguous plantation concession in Indonesia. In total, the area is larger than the island of Singapore.

A third source with knowledge of the deal confirmed that PT Borneo Pacific is in the process of acquiring the plantations and arranging financing.

Thaslim, through his lawyer, said he was not immediately available to discuss the deal.


Malaysia's TH Plantations owns 95 percent of the Riau plantations and in April this year signed a conditional share purchase agreement with PT Borneo, the presentations show.

TH Plantations could not be reached for comment.

A total of 73,650 ha of the estate area has been planted. Other assets include six mills, a kernel crushing plant and biomass power plant.

Credit Suisse is financial advisor for the deal.

The bank said PT Borneo would buy TH Plantation's 95 percent stake for $910 million and is expecting to buy the remaining 5 percent owned by PT Primasakti Rizki Pertiwi.

"Including other transaction related expenses, the total purchase consideration is expected to be up to US$1.3 billion," a Credit Suisse investor presentation says.

The bank says Thaslim is the majority owner of PT Borneo Pacific and is involved in the holding of palm oil firms.

PT Borneo Pacific is a coal trader and miner.

Analysts said the deal would be among the largest palm oil asset acquisitions in recent years.

The deal was costlier than recent transactions by some listed firms, based on an enterprise value of nearly $16,000 per hectare and assuming no debt, said Ivy Ng, palm oil sector analyst for CIMB in Kuala Lumpur.

That was a positive sign for the market, said Ng, because it underscored demand for palm oil concessions, despite weaker crude palm oil prices, which have fallen 30 percent since April.

In 2007, palm oil giant Wilmar completed a proposed S$4.1 billion deal to acquire Malaysia's PPB Oil Palms Berhad, Kuok Oils and Grains Pte Ltd and PGEO Group Sdn Bhd.

The same year, the plantation assets of Sime Darby, Kumpulan Guthrie and Golden Hope Plantations merged to create the world's largest listed palm-oil group worth $8.6 billion at the time.

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