KUALA LUMPUR: The proposed listing of state-controlled plantation group Felda cleared a major hurdle yesterday when the controversial plan won the backing of a key shareholder.

Koperasi Permodalan Felda (KPF), a cooperative comprising employees and settlers of the plantation group, voted overwhelmingly in favour of a corporate restructuring that will pave the way for the listing of Felda Global Ventures Holdings Bhd, executives who attended the group’s EGM told The Edge Financial Daily.

Felda has a complex corporate structure. The government’s wholly-owned Felda Global Ventures, which houses several troublesome overseas operations, has a direct 49% interest in the profitable Felda Holdings Bhd.

Felda Holdings, which controls all of the domestic agriculture businesses and other plantation-related business, is 51%-owned by KPF.

At yesterday’s EGM, KPF delegates voted in favour of the plan to transfer its 51% interest in Felda Holdings to Felda Global Ventures.

As a result, the profitable Felda Holdings will become a wholly-owned subsidiary of Felda Global Ventures, which in turn will be 51%-owned by KPF and 49% held by the government.

A major obstacle to the listing of state-controlled plantation group Felda appears to have been cleared when an overwhelming majority of Koperasi Permodalan Felda (KPF) delegates yesterday voted to transfer their 51% interest in Felda Holdings to Felda Global Ventures, which is slated for listing on Bursa Malaysia.

A section of the Felda delegates attending the EGM in Kuala Lumpur yesterday.

“About 1,100 of the 1,200 delegates voted in favour of the transfer. It was an overwhelming majority,” said a senior KPF official who requested anonymity.

But analysts said the vote doesn’t answer a more important question — is the listing plan getting the backing of Felda’s politically powerful settlers?

The plantation group’s 113,000 ethnic Malay settlers, who cast deciding votes in 54 parliamentary constituencies in Peninsular Malaysia, collectively own the cooperative.

But their representation in KPF is thin. Settlers make up about 55%, or about 112,000, of the 220,000 stakeholders in KPF. But only about 60 settlers own the maximum 250,000 units in the cooperative. The remaining stakeholders own an average of 6,000 units, which is equivalent to RM6,000.

Details of the proposed listing remain sketchy. But the troublesome issues include the valuations of Felda Global Ventures in the share swap with KPF, and the condition that the cooperative must surrender management control of the soon-to-be-listed entity to a group of government appointed entities.

The government had planned the public offering for sometime in May or early June. But political opposition to the plan forced the government to delay the IPO, which is set to be the largest public offering for the year.

For its financials ended December 2010, Felda Holdings posted a profit after tax of RM614.24 million on the back of RM14.91 billion in revenue.

The company had reserves in excess of RM3.25 billion as at end-December 2010. Total assets were in excess of RM7 billion, while its current and non-current liabilities amounted to about RM2.6 billion.

Felda Global Ventures meanwhile registered a profit after tax of RM287.25 million on RM3.15 billion in sales for its financial year ended December 2010.

The company had non-current assets amounting to RM4.55 billion and current assets valued at RM1.46 billion.

On the other side of its balance sheet, Felda Global Ventures had non-current debts of RM2.34 billion and short-term debt obligations of RM676.64 million.

This article appeared in The Edge Financial Daily, April 20, 2012.