Priceworth International Berhad

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SABAH APPROVES FMP FOR FMU5, PRICEWORTH ONE STEP CLOSER TO
COMPLETING ACQUISITION


KOTA KINABALU, 25 Oct 2017:TIMBER and sustainable forest management group Priceworth International Bhd today announced that the third Forest Management Plan (FMP) for Forest Management Unit No. 5 (FMU5) has been approved, paving the way for the next step in its proposed acquisition.

"With the Sabah Forest Department’s approval of the FMP for the period 1 Sept 2017 to 31 August 2027, a condition precedent of the the proposed FMU 5 acquisition has been deemed fulfilled,” said Richard Koo, Priceworth executive director today.

The first condition precedent to be fulfilled was earlier in May, with the Sabah Forest Department’s approval of repair, upgrading and harvesting operations in two compartments in FMU5. ”Our operations in Compartments 57 and 58, which began while the FMP was under final preparation, will be continuing as permitted,” said Koo.

Priceworth today announced that the third FMP has been approved by the Sabah Forest Department and accepted by Anika Desiran Sdn Bhd (ADSB) which owns the rights to manage, replant and harvest FMU5. Through its Singapore subsidiary GSR Pte Ltd, Priceworth has proposed to acquire ADSB and FMU5 from vendor Transkripsi Pintar Sdn Bhd for RM260 million.

A Singapore Exchange-listing is being planned for GSR, which has also proposed to acquire sister company Sinora Sdn Bhd, which is Priceworth’s plywood manufacturing arm.

FMU5 is part of 1.8 million ha of Class II commercial forest reserves being managed under Sustainable Forest Management Licence Agreements (SFMLA), which are guided by FMPs as regulated by the SFD.

One requirement of the FMP was already met in November 2016, with the surrender of 12,241 ha from FMU5 to be conserved as a Class I protected forest. This area has been fused with FMU10, which is now known as the Nuluhon Trusmadi Forest Reserve.

With the excision, FMU5 now comprises 88,920 ha with a tenure of 81 years remaining. One of the remaining condition precedent to the deal is the execution of a supplementary agreement to reflect the excision, the company said.

“The third FMP was drawn up following extensive consultation among the SFD’s Forest Management Plan Team, researchers, government agencies and non-governmental organizations (NGOs),” said Koo. “We fully support the aims and objectives of SFM which is crucial for conserving and protect the natural resources of the State for future generations,” said Koo.

“Priceworth has transformed internally over the last 10 years to meet the requirements of Sabah’s SFM regime and its key measure of Reduced Impact Logging (RIL). We are well-placed to excel in this new landscape for sustainable renewable timber and forest resources,” he added.

Over the last 10 years, Priceworth has invested more than RM100 million in upgraded equipment as part of its commitment to producing sustainable, renewable timber, including eight log fishers which are approved for RIL, a forest harvesting technique which helps minimise the environmental impact on forests, soil and water quality.

The key terms of the third FMP, in summary, are:
  • To surrender about 12,241 hectares of forest area to be reclassified as a Class I Forest Reserve;
  • To use 9,317 ha as Industrial Tree Plantation (ITP) and 69,239.3 ha under Natural Forest Management (NFM)
  • To leave to ADSB’s discretion whether to voluntarily impose restrictions on prohibited species or diameter limits within the ITP;
  • To replant the ITP area with a variety of indigenous timber species including Laran, Binuang and others (such as Hopea (Cengal), Gagil (Merawan), Ketapang, Madang) depending on the terrain and soil suitability;
  • To carry out salvage harvesting within the ITP area from September 2017 to August 2025;
  • To carry out harvesting within the NFM area from September 2017 to August 2027.


For more information, please see the full announcement at http://www.bursamalaysia.com/market/listed-companies/company-announcements