Sime Darby Plantation Berhad (SDP) would like to confirm that an announcement on the intention of PT Inti Nusa Sejahtera (PT INS) to acquire 100% interest in PT Mitra Austral Sejahtera (PT MAS) was published in a local Indonesian media publication on 26 February 2019. This announcement was made in compliance with the provisions of prevailing Company Law in Indonesia.
The decision to sell-off the stake in PT MAS has been made by our Board of Directors after careful deliberation of all pertinent matters and in the best interest of SDP shareholders. It is driven mainly by the poor financial performance of the asset. Since it was established within SDP in 1996, PT MAS has accumulated losses totalling over RM300 million (Rp 1,070,000,000,000) as at December 2018. Our Board has concluded that this poor financial performance is no longer tenable. This decision also aligns with the Group’s current strategy of reviewing our investment in non-performing assets.
SDP has been making diligent efforts and investments, not just in developing our operations but also in contributing to the socio-economic development of PT MAS's surrounding communities. Over the years, the company faced many challenges, but at the same time, significant progress were also made in resolving disputes with the local communities. However, it is now important for all stakeholders to concede that the main aim of the communities with regards to their rights can only be obtained with the involvement and agreement of the authorities. SDP can only help to facilitate but we are not able to go beyond what has been provided by the terms and conditions of our Right to Cultivate License (HGU) which had been granted by the government.
In view of this, we believe the new owner of PT MAS, which is a locally-owned Indonesian company, will be able to continue assist the communities to further their interest. The sale which includes a list of condition precedent (CP) will pave the way towards a future that will be more beneficial for the local economy and surrounding local communities and as such, we truly hope this transaction, once completed, would augur well for the mutual interest of all PT MAS’s stakeholders.
The full announcement on the details of this transaction will be made by SDP upon its completion, in compliance with Bursa Malaysia requirements.