Buying Eagle High Plantations

FELDA has got this habit of talking big. It says the purchase of EHP at RM2.3 billion will not affect its commitment to look out for the welfare of settlers. 

Maybe so, but how will they do that? By just , as the Malays say- just do the teeth and tongue thing?  Gigi dengan lidah means just talk for the sake of winning the current argument. 

Up to now, we have not received or seen the year ending 2015 accounts of FELDA. And 2016 is almost over. It’s late by 1 year. It made losses as at end 2013 and 2014. So how will FELDA back up its big talk?

I am suggesting a more sinister plot which involves of course the MO1. Maybe it was he who set up eagle high together with friend Peter Sondakh. That was when he met Peter in 2014.

The initial seed money may have come from the loan from KWAP- RM4 billion where already RM400 million was used. We know this amount has been used. It was answered in parliament. 

Up to today, the government cannot explain how the loan of RM4 billion was applied and where the fund was appointed to.

It’s a nice story to build up. We actually don’t know.

So how will FELDA finance the purchase? It has no money. The income from its linkage with FGV is not coming because FGV is making losses. I hope they still get paid rental of RM250 million a year. If they haven’t spent the rental income, by now, they would have RM1 billion cash. But the year ending 2013 and 2014, did not suggest they have that amount of money.

So either, the balance from the RM4 billion will now be directed to acquire the 37% in EHP or FELDA will issue debt instruments. The later business model- described as fucked up by Johari  Ghani, Finance Minister # 2, is a favoured method by the PM. Felda will need to borrow more than RM2.3 billion. The government will agree to the issuance of bonds, giving them the government grantee needed.

Why do they need to borrow more than RM2.3 billion? Because it’s buying into a company with only 125,000 hectares of land planted. It still has to develop the balance 195,000 hectares. The cost of planting  a greenfield till production is around RM15,000 per hectare. Assuming FELDA’ share is RM5500 per hectare, Felda will have to put up RM 1 billion at the very least.

This is a bloody expensive piece of real estate to buy. Real estate, because FELDA is using a SPV- FIC Properties Sdn Bhd to buy RHP. 

But the PM must have it. If he does that, he cannot dismiss the suspicions that this is a purchase at an inflated price by at least 30%. The inflated portion will come in handy to buy votes in the GE14 said to take place in October or November 2017.