Monday, 4 June 2012

FGVH Listing: Misery or Windfall?


Every Felda settler is an automatic member of their Cooperative (KPF). KPF owns 51% of Felda Holdings, the business unit that is the rainmaker for Felda. Has any settler asked what happens to KPF after the listing? Where is its 51% in Felda Holdings? 

Did KPF get anything? If an EGM has taken place and delegates agreed to the transfer of KPF’s interest in Felda holdings and in 10 other subsidiaries, how was its stake in FH valued? Where did it go and how much stake does it get in the enlarged FGVH? I haven’t seen any clarification on this matter written anywhere. It’s as though, KPF’s stake has vanished into thin air. Was this the reason Is Samad came up with a statement that Felda has allocated 20% to settlers’ interest to be handled by a trust fund? Will KPF continue to exist? 

Let’s be clear about this. We are not opposed to the idea of the settler receiving RM 15000 per household. The money is probably theirs anyway, derived probably from underpaid previous dividends.  How many times have settlers gone before the courts demanding Felda make good over it’s under declaration of extraction rate on Fresh Fruit Bunches (FFB? Probably over the years, the value of the extra extraction ran into 100 of millions. RM 15k is probably a cumulative backdated under-payment to each felda household (112,635 of them). 

The settler, especially the first generation must think of the future by assessing what they are losing out. There is no way now, second generation Felda settlers can lay claim on the 360,000 hectares of land managed by Felda Plantations. All the land and the assets therein are leased to FGVH for 99 years. While Felda probably gets payments on the lease, the lease rate is revisable every 20 years. They must also be mindful of the fact, that they also lose about RM 2.5 billion a year from earned revenues which are used to manage the felda plantations and provide social amenities. Felda needs RM 3b a year to run its operation. 

If the money comes from the government, this raises another issue. From which source too, it does no matter now. Probably when in London, the PM sold this business of FGVH IPO to Louis Dreyfus and sold 20% of the business and got RM 3 billion. Maybe part of the money is allocated for paying off felda settlers. The SC should look whether all material information has been given by FGVH. I don’t see the sale to Louis Dreyfus in the FGVH prospectus- did it materialize? Or is it hidden under the 23% share under FAHC?

We are therefore left with the question, why is the settler given RM 15k when ordinary kampong folks are not?  The plausible answer is, it’s done to soften settlers up into forcing KPF to agree to the FGVH listing. Then, clearly that is bribery. 

Secondly it’s given to actually soften up the settler when he realizes that he will get a smaller value when the FGVH IPO takes place. He will probably get around RM 810 or even less after deducting banking charges and other fees. 

It’s crucial to put pressure on KPF through the settlers. So when an EGM or AGM takes place, the delegates can vote asking KPF divests its 51% in Felda Holdings as the interests they have in 10 Felda Holdings subsidiaries. Unless KPF divests its 51% in Felda Holdings, Felda only has one portion of the core asset. Indeed the only asset that matters- Felda Holdings. 

Now felda is at again. What we are opposed is seeing the settler believing that this IPO is done to elevate their welfare. This IPO will lead to the concentration of vast resources and power in the hands of a few mandarins. 

After the listing how much will settlers get? 91.2 million shares or 2.5% out of the 3.648 billion shares. Felda employees will get 3% of the offered shares or 109.44 million shares. Settlers and employees get 5.5% of the shares offered. Institutional investors (41%), MITI(11.5%) and the Public( 2%). 

Felda settlers really don’t know what they are getting into. By hook or crook KPF is made to give up its 51% share in Felda Holdings. Felda owns FGV. FGV owns 49% of Felda Holdings. KPF is the 51% owner of Felda holdings. KPF is 30% owned by Felda directly and 70% owned by settlers. So, any which way, Felda is in the loop.  So, all the while Felda and the consultants are the ones planning to wet their massive beaks in this deal. 

As to the settlers, they may well find themselves to be in the same position as they are now. Each year, Najib will come around handing them dividends telling them, this is government money that we are giving out to you because we care for you. We are such a good government because the people are always in our heart. The sad truth is, they may even find themselves receiving less dividend payments if the management at FGV fumbles and earn less revenue or become less efficient. 

Being cooperative members, they get dividends each year anyway. Will they not get their yearly dividends if the IPO doesn’t take place? They will still do. They get miserly amounts. Sometimes the people in Felda Chini in Pekan get RM 400 each after paying off kedai koperasi from where they have taken provisions. So, yes, the RM 15k is much welcome and some portion of the money is used to settle off debts.  

Again yes, the RM 15k is a welcome relief and a windfall. It is the price of future misery.

8 comments:

bruno,  4 June 2012 at 08:37  

Dato,to the settlers the 15,000 promised them is a godsend and therefore is a windfall for them.To them it doesn't matter where the money comes from.The settlers wouldn't know the difference between Madoff and Warren Buffet.To them they are the same,orang putihs(white monkeys).

In the near future when most of them have finished the money,and the FGV shares have tanked,then they will be out looking for the Umnoputras.But by then the Umnoputras would have set up house in Zimbabwe.

But there is no way they can get at them as Malaysia do not have an extradiction treaty with the cowboy state.Then they will be cursing and kicking their own sorry sore asses.

Anonymous,  4 June 2012 at 10:06  

Orang Felda bukannya faham dengan benda ni semua.Cakaplah banyak kali pun, orang Felda takkan faham.Benda mcm ni memeningkan kepala.Kalau nak terangkan pada Orang Felda, kena buat suatu gambarajah yng mudah difahami utk mereka.

Anonymous,  4 June 2012 at 13:08  

Even though Felda folks realized they were being robbed, it's ok as long as it's their own kind.

Anonymous,  4 June 2012 at 16:00  

The stock has the word "SHORT!" written all over it. Care to share your idea how to best short it when it comes on board, Dato?
On the other hand, shorting public listed companies that own chunks of it could be an alternative too.
Action speaks louder than words, right?

rickyG,  4 June 2012 at 18:50  

It's may be similar to the prime mortgage loans scandals that were bundled and sold to investors all over world! A financial institution may be advising Najib to do just the same by first using complex deals thru FGVH to get Felda off the control of the settlers, privatized it to later sell it in foreign markets.

2nd, should Felda be further qualified to receive subsidies from the Country's tax-payers money for its operations since it will by most part a private entity soon. With shares trading in the whole wide world.

Anonymous,  5 June 2012 at 00:38  

eAch settller is alllocated 800 units of shares...haha.. big deal, as if the settlers would become rich overnight upon selling their alllocation. Cimb/remisers/non-settlers will earn more from
the deal. tq najib

Anonymous,  5 June 2012 at 18:38  

Misery to the Orang Felda only 810 units shares but to the Kakitangan Felda 6 lots that's 6000 units it's surely windfall.
Misery to the Orang Felda RM15000 only with the prospect of losing everything to the Management 10 acre x RM130000 = RM1.3Million Surely windfall.

Anonymous,  10 June 2012 at 18:33  

From what I understand, Felrda settlers are fleeced year in year. Sub-standard fertilisers were used. Sometimes work like fertilising, fencing, etc etc are sub-contract out and the sub-contractors either give shoddy work or dont work at all and the settlers are billed for everything, including electrical fencing which never existed. Thus settles are perpetually in debts, coupled that with lower payment for their produce, at the end of the day, Felda settlers are human slaves tied to their master for generations. This listing exercise, in my personal opinion, is a land grab to enrich the few and it is not only daylight robbery but cruelty at its highest level. Finally the RM15k, is probably what was the settlers right in the very first place from years of fleecing them. Frankly, I think whoever is behind this, is not only disgusting but revolting as well.

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