KUALA LUMPUR: FGV Holdings Bhd is divesting its entire stake in loss-making FGV China Oils Ltd for RMB165 million (or RM100 million) to China-based Grand Industrial Holding Co Ltd (GIH).
The plantation giant had on July 10 inked an equity transfer agreement with GIH for the divestment.
FGV China Oils is based in the southern city of Dongguan. It is principally involved in the processing, refining, storage and marketing of edible oils in China.
FGV said FGV China Oils has been incurring losses due to market disparity arising from competition coming from regional suppliers.
The sale will not have any material impact on FGV’s current China business or its strategic plans for the China market, it added.
FGV said this sale was in line with its transformation plan to divest non-performing assets and maximise returns to its core businesses.
“The sale should complete between the end of 2019 and the first quarter of 2020. Proceeds will then be used for FGV’s working capital,” it said.
The proposed disposal is not expected to have any significant impact on the earnings per share of the FGV, it added.
As at end-2018, FGV China Oils’ shareholders funds amounted to RMB107 million.