1. INTRODUCTION
The Board of Directors of FGV is pleased to announce that Felda Global Ventures Downstream Sdn Bhd (“FGVD”), a wholly owned subsidiary of FGV, has on 13 November 2013 entered into a joint venture and shareholders’ agreement (“JVSA”) with Lipidventure Sdn Bhd (“LVSB”) to establish a joint venture company (“JVCo”) to undertake the development, construction, fabrication and operation of a plant to be located in Kuantan, Pahang Darul Makmur (“Plant”) to produce tocotrienol (vitamin E) (“Product”) from refined bleached palm oil (“Proposed Joint Venture”).
2. DETAILS OF THE PARTIES
2.1 Information on FGVD
FGVD was incorporated in Malaysia, on 6 January 2012 under the Companies Act, 1965 having an issued and paid up share capital of RM13,920,382.42. It is a wholly owned subsidiary of FGV which spearheads the downstream activities of the FGV Group.
2.2 Information on LVSB
LVSB was incorporated in Malaysia on 17 July 2012 under the Companies Act, 1965. As of the date of this announcement, LVSB has an issued and paid up share capital of RM100,000.00.
LVSB is principally involved in investment holdings and creation of innovative technologies in producing high value downstream derivative and niche products from palm oil.
3. SALIENT TERMS OF THE JVSA
3.1 Conditions Precedent: The Proposed Joint Venture is subject to the fulfillment of the following conditions precedent within two (2) weeks from the date of the JVSA (“Conditions Precedent”):
(a) Delivery of LVSB’s corporate approvals to FGVD;
(b) Delivery of FGVD’s corporate approvals to LVSB; and
(c) Delivery of document or certificate of warranty and indemnification by LVSB and EPCC contractor to FGVD.
3.2 Incorporation of JVCo: The JVCo will be incorporated by the Parties under the name of FGV Lipid Venture Sdn. Bhd., or such other name mutually agreed by the Parties with an authorised capital of RM25,000,000 divided into 25,000,000 ordinary shares of RM1.00 each and the initial paid-up capital of RM100 divided into 100 ordinary shares of RM1.00 each.
3.3 Business of JVCo: The business of JVCo will be, amongst others, to carry out the extraction, production, sale, marketing and distribution of high value niche palm oil based products including but not limited to tocotrienol (vitamin E).
3.4 Equity participation: FGVD and LVSB equity participation shall be premised on the shareholding proportion of 40:60 respectively.
3.5 Call Option : Upon completion of the Conditions Subsequent, FGVD may at any time exercise a call option on LVSB to acquire 20% of the JVCo shares held by LVSB.
3.6 Condition Subsequent: The JVSA is subject to several Conditions Subsequent, which among others, include the technical due diligence, the procurement of necessary approvals, permits and licenses for the JVCo to conduct its business and the completion of the construction of the plant. The Conditions Subsequent are to be fulfilled within twenty four (24) months from the Effective Date (“Conditions Subsequent Period”). Unless otherwise agreed by the Parties, in the event any one of the Conditions Subsequent is not completed in accordance with the relevant time frame, either Party may terminate the JVSA.
3.7 Board composition: For so long as the shareholding proportion of FGVD and LVSB remains as 40:60 respectively, FGVD is entitled to nominate two (2) directors and LVSB is entitled to nominate three (3) directors to the board of JVCo.
4. RATIONALE FOR THE PROPOSED JV
Through the joint venture, FGVD and LVSB will be able to collaborate and leverage on each other's strength. LVSB with its expertise in technology and know-how and FGVD access to raw materials for tocotrienol extraction. This will enable FGV to tap the unrealized values in its refineries and create a new revenue stream for the shareholders as well as opening up the opportunity to tap the vitamin E market in nutraceutical business.
5. SOURCE OF JV FUNDING
The JVCo will be funded by externally source funds and Malaysian Government’s Performance and Management Delivery Unit’s grant under EPP 8.
6. EFFECTS OF THE PROPOSED JOINT VENTURE
6.1 Earnings and Net Assets
The Proposed Joint Venture will not have any material impact on the earnings per share and net assets of FGV for the financial year ended 31 December 2013.
6.2 Gearing
The Proposed Joint Venture will not have any material impact on the gearing of FGV for the financial year ending 31 December 2013.
6.3 Issued and paid-up share capital and shareholding of substantial shareholders
The Proposed Joint Venture will not have any effect on the issued and paid-up share capital and shareholdings of the substantial shareholders of FGV.
7. APPROVALS REQUIRED
The Proposed Joint Venture is not subject to the approval of the shareholders of FGV or any governmental authority.
8. DIRECTORS’ AND MAJOR SHAREHOLDERS’ INTEREST
None of the Directors and major shareholders of FGV and/or persons connected with them have any interest, direct or indirect, in the Proposed Joint Venture.
9. ESTIMATED TIMEFRAME FOR COMPLETION
Barring any unforeseen circumstances, the Proposed Joint Venture is expected to be completed in the fourth quarter of the financial year ending 31 December 2015.
This announcement is dated 13 November 2013.
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