Halcyon Agri to record US$10.6m gain from subsidiary's land sale

NATURAL rubber supplier Halcyon Agri Corporation's 5VJ : 5VJ 0%70 per cent indirectly-owned subsidiary is selling 54.5 hectares (ha) of freehold land for 11.1 billion CFA francs (S$25.9 million) or US$19 million in cash.

Upon completion of the transaction, Halcyon Agri expects to realise a gain of about 6.2 billion CFA francs or some US$10.6 million based on the CFA-USD exchange rate as at Nov 30, 2021.

In a regulatory filing on Wednesday (Dec 29), the group said it anticipates the deal to have a positive impact on earnings per share (EPS) and net tangible assets (NTA) per share for the current financial year ending Dec 31, 2021.

Had the sale taken place in FY2020, it would have resulted in a gain of US$11.6 million based on the CFA-USD exchange rate as at Dec 31, 2020.

As such, the group's pro forma EPS for FY2020 would have seen an improvement of 0.51 US cent from a loss per share of 3.43 US cents to a loss per share of 2.92 US cents. NTA per share for the same period would have improved 0.73 US cent from 28.13 US cents to 28.85 US cents.

The indirectly-owned subsidiary, Tropical Rubber Cote d'Ivoire (TRCI), is a rubber producer located in Ivory Coast.

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The 54.5 ha land plot is located on the outskirts of Abidjan along the Autoroute du Nord, the highway that connects Abidjan to Ivory Coast's capital city, Yamoussoukro. It is part of 206 ha of leasehold land which TRCI recently converted to freehold land titles.

Based on the FY2020 audited financial statements of TRCI, the land plot has a book value of US$303,000. It has an aggregate market value between US$17.7 million and US$26.1 million based on independent market valuations for land situated in the vicinity.

Halcyon Agri noted that the land for sale is situated in a "strategic area that is slowly changing from agricultural-focused site to one that features more urban characteristics".

The group believes selling the land is in the best interests of Halcyon Agri and its shareholders, as the disposal of such non-core and undeveloped land assets comes as part of its deleveraging plan to strengthen its capital structure.

It intends to invest the disposal proceeds for the future growth of its core businesses.

Halcyon Agri added that it does not expect the transaction to have a significant effect on the group's existing operations or its risk profile.

Shares of mainboard-listed Halcyon Agri were trading S$0.01 or 4.6 per cent higher at S$0.23 as at 1.27 pm on Dec 29, after the announcement was made.

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