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TH Plantations said the two companies had been acquired at a high cost of RM264.2 million in 2013, after an independent valuation in 2012 that was based on a total plantable area of 5,700 hectares.

KUALA LUMPUR: TH Plantations Bhd has sold two non-performing subsidiaries Bumi Suria Ventues Sdn Bhd and Maju Warisanmas Sdn Bhd to Tamaco Plantation Sdn Bhd for a combined RM170 million.

TH Plantations said the two companies had been acquired at a high cost of RM264.2 million in 2013, after an independent valuation in 2012 that was based on a total plantable area of 5,700 hectares.

However, an aerial survey in November last year had shown a lower actual plantable area of 4,842ha out of a total area of 6,513ha.

“Based on lower actual plantatble area, an independent valuer in 2018 valued the land at RM183.9 million or RM11,425 per acre,” TH Plantations said in a statement today.

At the point of acquisition, TH Plantations had projected a high poduction of fresh fruit bunches (FFB).

“The actual FFB production achieved from 2014-2018 were very much lower by 68 per cent as compared to the projection,” the company added.

Due to poor performance of the companies, TH Plantations had to continuosly inject funds to support their operational needs.

The company said its financial obligations had significantly increased due to acquisitions of several companies.

As at December last year, TH Plantations’ group outstanding borrowing was RM1.2 billion with trade and other payables at RM202.7 million.

TH Plantations incurred losses of RM658.4 million last year, mainly due to impairment of assets arising from high cost of investments in the past.

The company had been facing financial difficulties since 2014 due to the high cost of investments.

In order to meet its financial obligations, TH Plantations previously had to disposed two of its subsidiaries namely TH Bakti Sdn Bhd in 2015 for RM16.3 million, followed by THP Gemas Sdn Bhd in 2016 for RM154.1 million.

“TH Plantations’ financial position continues to deteriorate. The sale (of Bumi Suria and Warisanmas) is necessary to provide the much needed funds to prevent a much bigger losses if TH Plantations defaults on its financial obligations,” the company said.

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