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FMP for FMU5 approved
Published on: Thursday, October 26, 2017

Kota Kinabalu: Timber and sustainable forest management group Priceworth International Bhd 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 proposed FMU5 acquisition has been deemed fulfilled," said Priceworth Executive Director Richard Koo.

The first condition precedent to be fulfilled was earlier in May, with 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.

The FMP has been 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..

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.

"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.

Priceworth also said the indicative market valuation of the Timber and Planting Rights of FMU 5 based on the third FMP stood at roughly RM480 million as valued by Jurunilai & Perunding Hartanah Sabah.

The final valuation is expected to be completed and submitted to Bursa Securities by mid December 2017, it added.

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