MP casts wary eye at US$328m windfall for Indonesian tycoon in ‘rotten’ Felda deal

KUALA LUMPUR, June 16 — Felda Global Venture Holdings’ proposed purchase of a stake in Eagle High Plantations would let Indonesian magnate Peter Sondakh’s firm pocket a US$328 million (RM1.23 billion) profit from its investment six months ago, said a federal lawmaker critical of the deal.

Continuing to question FGVH’s rationale for paying nearly twice what the 37 per cent stake in the Rajawali Group unit would cost on the open market, Serdang MP Ong Kian Ming pointed out that the bourses have reacted negatively to the announcement.

Ong said that Sondakh’s Rajawali took over Eagle High née BW Plantations for just IDR400 per share late 2014, after which the firm’s value dropped as low as IDR245 in April.

“Hence, it must have caught the market by surprise when FGVH made an offer to acquire 37 per cent of EHP through a combination of cash and FGV shares from the Rajawali group which was valued at US$679 million or IDR775 per share.

“When this deal was announced on the 12th of June, 2015, EHP was at IDR450 per share on the Jakarta Stock Exchange,” Ong said in a statement today.

Beyond the high price FGVH offered for the stake, Ong further questioned the decision to place nearly a quarter of the entire transaction value as a non-returnable deposit for the purchase.

The DAP MP noted that regardless of whether the Malaysian conglomerate proceeds and withdraws from the deal, it would have to pay Eagle High the US$174.5 million deposit that a CIMB analyst noted was beyond the usual 10 per cent.

“It stinks of the type of poor corporate governance that landed 1MDB in financial trouble and it seems very likely that the shareholders of FGV which includes FELDA settlers as well as the members of the public (via shareholdings of KWAP, Tabung Haji and EPF) will have to pay for these poor decisions.

“The Rajawali group nets a tidy profit while ordinary Malaysians will have to pay the price. Something is indeed very rotten in the state of FGVH,” the DAP MP added.

FGVH suspended trading of its shares on Friday when the firm announced that it is proposing to purchase the stake in Eagle High.

The deal has come under criticism from business analysts and lawmakers alike, with the market similarly unreceptive.

During the weekend, former New Straits Times group chief editor Datuk A. Kadir Jasin categorised Sondakh as Prime Minister Datuk Seri Najib Razak’s “advisor” on Indonesian affairs.