Felda to use unlisted unit to seal deal in Indonesian plantation PT Eagle High

State-owned conglomerate Felda will use an unlisted unit to buy into Indonesian tycoon Tan Sri Peter Sondakh's debt-burdened Rajawali Group, sources familiar with the matter said, seeking to avoid heavy investor criticism that scuttled an attempted deal last year. Plans for Felda to buy 37% of palm oil plantation firm PT Eagle High Plantations Tbk collapsed last year after politicians and investors blasted a US$680 million (RM2.4 billion) deal as an expensive favour for Peter, who has long-standing ties with Prime Minister Datuk Seri Najib Razak. Both Najib and Peter have said that the deal was commercially driven. This time, instead of using its main listed entity, Felda Global Ventures Holdings Bhd, the world's third-largest palm plantation operator, Felda will use an unlisted unit to acquire the stake. It is also seeking to cut the price by as much as 30%, the sources said. "The deal is still very much alive with (a) good discount," said one person close to Putrajaya. Getting a deal done will help ease debt woes for Peter, who like other tycoons in the country has been hit hard by the commodities rout and a slide in the rupiah. Peter and Eagle High declined to comment. Rajawali Group said the transaction with Felda was "being finalised" but declined to give details or comment on the group's debt levels. Felda Global Ventures declined to comment. Felda Group and unlisted unit Felda Investment Corporation – which the sources said was likely to be the one acquiring the stake – did not respond to requests for comment. High multiples Under the rejigged terms, Felda Group could rework the offer to include debt that would be exchangeable into shares in another company controlled by Peter, the sources said. Several sources said they expected the deal would close next month, though one said the situation was "still fluid". Felda and Rajawali have touted the commercial logic of marrying Felda's palm oil processing capabilities with Eagle High's plantations, with Felda arguing that it was difficult for it to acquire more landbank in Malaysia. But the original deal proposal proved too expensive for investor comfort levels. The proposed acquisition implied a price of 775 rupiah per share or 63 times estimated net profit for 2015, significantly above Eagle High's rivals, said CIMB Research analyst Ivy Ng. Its rivals trade at between 14 and 55 times earnings, according to Thomson Reuters data. Rajawali Group, which can trace its roots to a modest coconut oil and timber business, has become a sprawling empire spanning mining to property and Peter is known for his strong political connections. One of his first partners was Bambang Trihatmodjo, a son of Indonesia's former president Suharto. Together, they built the Grand Hyatt hotel in Jakarta and Indonesia's first privately owned television network, Rajawali Citra Televisi Indonesia. But last year, Peter's worth fell by around US$400 million from a year earlier to US$1.9 billion, pushing him out of rankings of Indonesia's top 10 richest, according to Forbes business magazine. In addition to Eagle High, he has been trying to sell stakes in PT Nusantara Infrastructure Tbk, taxi operator PT Express Transindo Utama Tbk and gold miner Archi Indonesia. – Reuters, February 12, 2016.]]>