SIME Darby Plantation Bhd has completed the sale of Sime Darby Plantation (Liberia) Inc (SDPL) to Mano Palm Oil Industries Ltd (MPOI).

SDPL was sold to MPOI for US$1 (RM4.06) plus earn-out payment, the sum of which will be determined by the average future crude palm oil (CPO) price and future CPO production of SDPL in year 2022.

The earn-out consideration is payable in equal quarterly instalments over a period of eight years, commencing April 2023, the group said in a statement today.

Group managing director Mohamad Helmy Othman Basha said the earn-out payment constitutes continuing potential income for the group even after SDPL ceases to be its subsidiary.

“But more importantly, this divestment will enable us to prevent further losses in our books and reallocate our financial resources into areas where they will create the highest value for the group and its shareholders,” he said.

He pointed out that the terms and conditions of the asset sale were agreed to with the buyer considering the group’s cash outflows and SDPL’s continuous loss-making state.

SDPL has been a continuously loss-making operation since its inception.

In 2018 and 2019, it registered operational losses of US$19 million and US$16 million, respectively, even before asset impairment.

“Although the group has endeavoured to reduce its cost of operations and taken various steps to enhance the efficiency of the operations, it still could not sustain its operations and provide long-term sustainability for the business,” Helmy said.

MPOI, a unit of Mano Manufacturing Company, is involved in the purchase of CPO and exporting it to various destinations across West Africa. – Bernama, January 16, 2020.