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Sime Darby Liberia Concession Agreement

Sime Darby Plantation signed a 63-year concession contract with the Liberian government in 2009 to turn 220,000 hectares in northwestern Liberia into oil palm and rubber plantations. However, the company had only planted more than 10,300 hectares due to different challenges. The agreement marked the end of Sime Darby Plantation`s business, which has been loss-making since its inception and compounded by a drop in palm oil prices in 2017-2018. Last year, the company reviewed the sale of businesses in Liberia as part of its monetization program. Earn-out`s payment is determined by the future average price of crude oil and the unit`s future CPO production, the company said on the exchange. Payment from buyer Mano Palm Oil Industries, a local Liberian company, will be made quarterly over eight years starting in April 2023. Sign up for our newsletter to receive our best stories right in your inbox. KUALA LUMPUR (Nikkei Markets) — Malaysia`s Sime Darby Plantation, the world`s largest producer of palm oil after cultivated area, announced Thursday the sale of the Liberian farm for a token of US$1 plus an earn-out payment. Prices of edible oil, used in everything from snacks to cosmetics, increased by almost 44% in 2019, mainly in the last months of the year, due to depletion of stocks, lower production and increased demand. Analysts said the sale, along with proceeds from the disposal of other non-core assets, will allow it to improve its financial health, reduce some of its borrowing and invest in other projects. „It`s good for them because they no longer need to consolidate the losses in their business,“ said CIMB investment banking analyst Ivy Ng. „This divestment will allow us to avoid further losses in our books and redeploy our financial resources to areas where they create the highest value for the group and its shareholders,“ Chief Executive Mohamad Helmy Othman Basha said in a statement. „SDP (Sime Darby Plantation) will continue to serve its multinational business and business customers to customers in Africa,“ the company said.

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