Bakrie to expand oil palm plantation area through joint venture

Jakarta (ANTARA News) - Publicly-listed PT Bakrie Sumatra Plantation Tbk has set up a joint venture company, Agri Resources BV, with several foreign investors to expand its oil palm plantation area.

"We plan to conduct extensive expansion with a target of increasing our plantations by 100,000 hectares within six years` time. We just received US$250 million worth of funds which are certainly very significant for implementing our plan," the company`s president director, Ambono Janurianto, said here on Tuesday.

He said his company had a 20-percent share in the new company which is based in the Netherlands by paying around US$10 million in participation capital.

The other US$90 million of the capital was paid by foreign investment companies and another US$150 million from senior secured notes issued by AI Finance BV, an affiliated company set up by the investors` partners in Singapore.

Ambono said on June 26 he had signed a document relating to capital participation in the Agri Resources BV that plans to acquire several plantation companies in the country.

As an initial step he said Agri Resources BV recently acquired a plantation company that holds 36,000 hectares of land in the southern part of Sumatra with 19,000 of them already planted, adding 75 percent of the trees in the planted area was already mature.

Ambono said the joint venture company had entrusted Bakrie Sumatra Plantation Tbk to manage plantation companies it would acquire based on a management agreement.

"We enjoy direct advantage through a management fee of US$100 per hectare per year from every plantation we manage," he said.

He said Bakrie would also get a marketing fee of US$10 per ton of crude palm oil and US$5 per ton of palm kernel sold based on an off-take agreement.

"We are optimistic the series of transactions that we have made will bring much benefit not only in terms of corporate financial performance but also income and operational performance," he said.

He said Bakrie itself expected to increase its plantation area by at least 7,000 hectares by the end of this year.