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GCCP inks agreement to acquire palm oil grower in RTO deal
CRUSHED limestone producer GCCP Resources has entered a non-binding Memorandum of Understanding (MoU) to fully acquire an Indonesian palm oil producer for S$220.3 million, resulting in a reverse takeover (RTO) of the Catalist-listed firm.
The target company is Arjuna Utama Sawit, which owns 53,000 hectares of oil palm plantations in Central Kalimantan, Indonesia. It harvests fresh fruit bunches and mills them into crude palm oil (CPO) and palm kernel (PK).
The S$220.3 million consideration will be paid via the issue of 3.67 billion shares of GCCP, at an issue price of S$0.06 to the vendors of the deal, Premier Palmoil Energy and Oilim Agriculture. All parties plan to retain GCCP's limestone quarry business in the company post-RTO.
GCCP will also issue 55 million shares, representing 1.12 per cent of its enlarged share capital, at the same issue price to consultancy CO2 Capital as arranger fees.
The MoU comes shortly after GCCP's board reshuffle on Oct 1, where an independent director resigned and a new non-executive chairman was appointed, among other changes.
GCCP's board finds that the RTO presents growth potential, given the expected rise in demand for palm oil from Indonesia's biodiesel programme. Arjuna Utama also has a young plantation age profile and plans to venture downstream into higher-value palm products, GCCP added.
"This favourable age profile positions the target well for strong production growth… The target has plans to process its CPO and PK into higher-value palm-based products such as biodiesel, palm kernel oil and refined, bleached and deodorised oleins," GCCP said in its filing.
The MoU provides six months of exclusivity for GCCP and the vendor to negotiate. The RTO will be conditional upon GCCP conducting due diligence on the financial, business and legal aspects of the target company. It will also need the approval of its shareholders for the deal.
The vendors and its concert parties will also seek a waiver of their obligation to make a mandatory general offer following the RTO. Another condition of the deal is that key members of the target's management team will be employed by the company for at least three financial years following the completion of the RTO.
Shares of GCCP closed flat at S$0.007 on Thursday.