Timber and sustainable forest management group Priceworth International Bhd has begun harvesting operations in Compartment 57 in Forest Management Unit 5 (FMU5), Sabah, through its subsidiary Sinora Sdn Bhd, following the completion of infrastructure and construction works.
“We expect timber harvested from Compartment 57 to immediately have a positive effect on our monthly production figures and ultimately on the throughput volume from our plywood manufacturing facility,” said Priceworth executive director Richard Koo. “This will lead to a positive contribution to our bottom line.”
In October 2016, Priceworth through its Singapore subsidiary GSR Pte Ltd proposed to acquire for RM260 million the rights to manage, replant and harvest FMU5 under a 100-year licence awarded in 1997. Under the Sustainable Forest Management Licence Agreement (SFMLA), FMU5 is to be planted, rehabilitated and harvested under the principles of sustainable forest management and environmental conservation for economic, environmental and social purposes.
With 81 years remaining, the 101,161 ha FMU5 is to be managed as Industrial Tree Plantation (ITP) and Natural Forest Management (NFM) areas, with about 12,200 ha to be returned to the Forestry Department Sabah as conservation area and 9,152 ha set aside for forest reserves.
As part of the acquisition exercise, Priceworth is also planning to raise funds via a Singapore Exchange-listing for GSR, the vehicle for acquiring FMU5. GSR has also proposed to acquire Priceworth’s plywood manufacturing arm through acquiring sister company Sinora.
Meanwhile, PWI has been informed that the third Forest Management Plan (FMP) for the period 2017 to 2026 is expected to be finalised and executed by mid-September by the relevant authorities.
The finalisation and execution of the FMP is a condition precedent in the sale and purchase agreement for Priceworth to acquire FMU5 via the acquisition of Rumpun Capaian Sdn Bhd and its subsidiary Anika Desiran Sdn Bhd.
Priceworth also informed Bursa Securities that it will be updating the Valuation Report, and withdrawing the one submitted earlier, it said in an announcement The company said the earlier valuation report was based on an earlier draft of the FMP submitted to the Sabah Forest Department, which may differ from the final FMP.