REG-R.E.A. Holdings plc R.E.A. Holdings plc: Conditional agreement for the sale of CDM
22/04/2025 14:15
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R.E.A. Holdings plc (RE.)
R.E.A. Holdings plc: Conditional agreement for the sale of CDM
22-Apr-2025 / 14:02 GMT/BST
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NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, DIRECTLY
OR INDIRECTLY, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD
CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF THAT
JURISDICTION
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
Announcement pursuant to UK Listing Rule 7.3
For immediate release
22 April 2025
R.E.A. Holdings plc ("REA" or the "company")
REA is pleased to announce that the company's principal operating
subsidiary, PT REA Kaltim Plantations ("REA Kaltim"), has today entered
into a conditional agreement for the sale of REA Kaltim's wholly owned
subsidiary, PT Cipta Davia Mandiri ("CDM"), to PT Teladan Prima Agro Tbk
("Telen") (the "Transaction").
The Transaction constitutes a significant transaction under the UK Listing
Rules and, accordingly, this announcement is being made as required
pursuant to UK Listing Rule 7.3 "Notification of significant
transactions". This announcement includes the additional information
required pursuant to UK Listing Rule 7.3.1R and UK Listing Rule 7.3.2R.
Highlights
• REA Kaltim has agreed the sale of CDM to Telen, valuing CDM's business
(on the basis of exchange rates ruling at 31 December 2024) at an
estimated $23.8 million.
• Realisation of that value will reduce the continuing group's debt,
further strengthening the group's balance sheet.
• Completion of the Transaction will result in the continuing group's
oil palm plantings being more geographically concentrated, allowing
for the group's resources and management time to be further focused on
its core assets.
• The parties are working towards a completion date of 4 June 2025,
subject to the satisfaction of certain conditions as described below.
Background
CDM is a wholly owned subsidiary of REA Kaltim and is engaged in the
cultivation of oil palms in the province of East Kalimantan in Indonesia
on land holdings comprising 9,784 fully titled hectares and additional
land areas, subject to completion of titling, of 5,454 hectares. The
latter area principally consists of land originally zoned for use under
the Indonesian transmigration scheme and held by CDM pursuant to a licence
(now lapsed but proposed to be renewed) issued by the Indonesian Ministry
of Transmigration.
Within CDM's land holdings, 4,193 hectares were classified at 31 December
2023 as planted with oil palms, of which 3,150 hectares were within the
fully titled areas and 1,043 hectares were outside those areas. During
2024, 940 hectares outside the fully titled areas were transferred, or
agreed to be transferred, to cooperative schemes (known in Indonesia as
"plasma schemes") for the benefit of local villages in the areas adjacent
to CDM's land areas.
Lying some 70 kilometres to the north-west of REA Kaltim's central
administrative area, the CDM estate is the most outlying estate within the
REA Kaltim group. Whilst the estate has the potential to become a high
quality estate, further investment in flood control and infrastructure and
several more years of good upkeep will be needed to realise that
potential. The transfer of the planted areas to plasma schemes referred to
above has resolved longstanding disagreements between CDM and local
villages regarding allocation of plasma plantings but, prior to that
resolution, such disagreements represented an additional uncertainty
affecting the company's interest in CDM. Against this background and
having regard to the need to reduce group indebtedness, the directors
concluded during 2023 that the group should pursue a sale of CDM.
In November 2023 the company reached an agreement with DSN for a further
investment by the DSN group in REA Kaltim and, in conjunction with that
agreement, granted the DSN group a priority right, for a limited period,
to acquire CDM on an agreed basis. However, DSN concluded, and confirmed
in June 2024, that it would not exercise its priority right. Following
that decision, the company sought alternative offers for CDM but the one
offer received was at a price that the directors considered too low. The
directors therefore decided to defer further negotiations for the sale of
CDM until the issue of plasma allocations to local villages had been
progressed.
With this now the case, and with the benefits of recent improvements to
upkeep standards becoming visible, REA Kaltim has been able to reach
agreement with Telen for the sale of CDM to Telen on terms that value the
business of CDM at close to the value that was reflected in the priority
right granted to DSN.
Telen is an Indonesian agribusiness, listed on the Indonesian Stock
Exchange. It manages and cultivates some 60,500 hectares of oil palm
plantations (including plasma land) in East Kalimantan and operates six
palm oil mills. Telen also operates a renewable energy business, currently
focused on utilising palm oil waste as fuel to generate electricity.
The Transaction
Pursuant to the sale and purchase agreement, further details of which are
set out Appendix 1 (Terms of the sale and purchase agreement), REA Kaltim
has agreed (a) to capitalise the outstanding loan balance of $7.7 million
owed by CDM to REA Kaltim at 31 December 2024 and (b) to subscribe further
shares in CDM for an aggregate subscription price equal to the amount
required by CDM to meet the statutory severance benefits due to employees
of CDM in respect of the termination of their employment deemed to occur
by operation of Indonesian law on completion of the Transaction, and to
sell the whole of the enlarged issued share capital of CDM to Telen for a
cash consideration to be calculated by reference to the formula set out in
paragraph 2 of Appendix 1 (Sale and purchase agreement) which, if applied
at 31 December 2024, would have resulted in a cash consideration of $9.2
million.
The net balance (if any) of monies advanced by REA Kaltim to CDM to fund
expenditure between 1 January 2025 and completion of the sale and purchase
agreement will be waived. Such amount is not expected to exceed the amount
payable by CDM to Bank Mandiri by way of interest and repayments of
principal in respect of the Bank Mandiri loan the subject of material
contract 2.2(b) in Appendix 4 (Additional information).
The Transaction is conditional upon, amongst other things:
a. completion of the agreed capitalisations of debt as referred to above;
b. Bank Mandiri consenting to the Transaction and agreeing to release
guarantees that have been provided by the company and REA Kaltim in
respect of the loan provided by Bank Mandiri to CDM; and
c. the statutory severance benefits due by operation of Indonesian law to
employees of CDM on completion of the Transaction having been duly
paid.
The parties are working towards a completion date of 4 June 2025. A
further announcement will be released at completion in compliance with UK
Listing Rule 7.3.3R.
Financial considerations
The consideration receivable by REA Kaltim for the enlarged issued share
capital of CDM and the release of the liability for the loan provided by
Bank Mandiri to CDM, net of the estimated cost of employee severance
payments, will realise a value for CDM's business pursuant to the
Transaction which, if calculated by reference to exchange rates ruling at
31 December 2024, would have amounted to an estimated $23.8 million before
expenses (which are expected to amount to $0.1 million) made up as
follows:
$’000
2,800* fully titled planted hectares at $8,000 per hectare 22,400
Value attributed to other assets (excluding plantation related
assets) less liabilities (other than amounts owed to REA Kaltim 2,254
and Bank Mandiri) and provision for employee retirement benefits)
of Rp 36.4 billion
Estimated cost of severance payments (855)
23,799
Representing
Consideration for the enlarged share capital of CDM 9,186
Release of liability for Bank Mandiri indebtedness 15,468
Estimated cost of severance payments (855)
23,799
* The 350 hectare shortfall on the 3,150 hectares previously treated as
planted within the fully titled areas reflects the low stands of oil palm
in the 350 hectares as a result of palms having been lost during flooding
and not yet resupplied.
Further financial information relating to CDM is included in Appendix 3
(Financial information re CDM).
The following table illustrates what the effect would have been on CDM's
net assets and net indebtedness as at 31 December 2024 (derived on the
basis detailed in Appendix 3) had the further changes proposed to be
effected pursuant to the Transaction prior to Completion become effective
as at 31 December 2024.
At 31 December Transaction Proforma
2024 charges
$’000 $’000 $’000
Net assets of CDM excluding
balances due to REA Kaltim and Bank 33,693 (469) * 33,224
Mandiri
Net indebtedness
Loan from REA Kaltim (7,665) 7,665 ** -
Loan from Bank Mandiri (15,468) – (15,468)
(23,133) 7,655 (15,468)
Net assets 10,560 7,196 17,756
* Estimated severance pay of Rp 13.8 billion converted to dollars at the
rate ruling at 31 December 2024 ($855,000) less employee termination costs
already provided at that date ($386,000)
** Capitalisation of the outstanding loan balance owed by CDM to REA
Kaltim at 31 December 2024
Gross assets of CDM, as included in the audited consolidated balance sheet
of the company as at 31 December 2024, amounted to $34.8 million. The loss
before tax attributable to CDM for the year ended 31 December 2024
amounted to $5.5 million (before partial release of an impairment
provision in relation to CDM assets recognised in the year).
Reasons for, and financial effects of, the Transaction
The principal objective of the Transaction is to reduce the group's net
indebtedness and to strengthen the group's balance sheet and broader
financial position.
In recent years, the group has implemented several strategic initiatives
with the objective of addressing the legacy of excessive net indebtedness
that had resulted from a series of operational challenges faced by the
group some years ago. Such initiatives have been successful in eliminating
the arrears of dividend on the company's preference shares (which stood at
£12.2 million at 31 December 2021) and in reducing the level of net
indebtedness from $211.7 million at 31 December 2017 to $159.3 million at
31 December 2024. However, the board is committed to achieving further
reductions.
Receipt of the cash consideration for the sale of CDM, coupled with the
release of the group from liability for the loan provided by Bank Mandiri
to CDM, will result in a further reduction in group net indebtedness which
reduction would, on the basis of the position on 31 December 2024, have
amounted to an estimated $23.7 million (net of estimated expenses of $0.1
million).
In addition to improving the group's net debt position, the Transaction
will relieve the continuing group of the need to fund further investment
in CDM and will permit the continuing group to focus its financial
resources and management on its remaining plantings, which will be more
concentrated within a single geographical area. CDM's estate currently
contributes approximately 7 per cent of the group's own crop, but the
estate's location would always mean that a large proportion of the CDM
crop would need to be processed in adjacent third party mills, reducing
the group's margins on CDM's production when compared with self-milled
production.
Completion of the sale of CDM will also mean that the continuing group
will no longer consolidate the results of CDM, which, impairment movement
apart, has historically contributed a loss to the group results before
taxation, the amounts of which, for the years ended 31 December 2022, 2023
and 2024, were as shown under the income statements for those years and
that period in Appendix 3 (Financial information re CDM).
Use of proceeds
The proceeds of sale of CDM will accrue to REA Kaltim and will be applied
by REA Kaltim in meeting repayments of bank borrowings.
Appendices
Appendices 1, 2, 3 and 4 to this announcement contain further information
regarding the Transaction pursuant to the requirements under UK Listing
Rule 7.3.1R and UK Listing Rule 7.3.2R.
Appendix 5 contains certain definitions used in this announcement.
Advisers
Financial adviser: N.M. Rothschild & Sons Limited of New Court, St
Swithin's Lane, London EC4N 8AL
Legal counsel as regards English law: Ashurst LLP of London Fruit and
Wool, Exchange, 1 Duval Square, London E1 6PW
Legal counsel as regards Indonesian law: WH&SD Law Group of Prosperity
Tower 161 Floor Unit E, District 8 SCBD Lot. 28, JI. Jend Sudirman Kav.
52-53, Jakarta, 12190, Indonesia
Opinion of the board
The Transaction is, in the opinion of the directors, in the best interests
of the holders of the company's shares and other issued securities as a
whole.
Enquiries:
David Blackett Carol Gysin
Chairman Managing director
R.E.A Holdings plc R.E.A. Holdings plc
Tel: 020 7436 7877 Tel: 020 7436 7877
Appendix 1
Terms of the sale and purchase agreement
The sale and purchase agreement is dated 22 April 2025 and is made between
(i) REA Kaltim and (ii) Telen.
1. Sale and purchase
Pursuant to the sale and purchase agreement, REA Kaltim has agreed to sell
the whole of the issued and to be issued share capital of CDM (the
"Shares") to Telen, including the one share in CDM held by PT Kutai Mitra
Sejahtera (a subsidiary of REA Kaltim).
2. Purchase price
The purchase price payable by the Buyer for the Shares is an amount equal
to:
a. $22,400,000, being the accepted value of the CDM estate, calculated on
the basis of 2,800 fully planted hectares at $8,000 per hectare; plus
b. Rp 36,422,738,977, being the accepted value attributed to certain
other assets of CDM; less
c. Rp 250,000,000,000, being the principal amount owed by CDM to Bank
Mandiri as at 31 December 2024.
The purchase price is payable in rupiah, with the dollar amount specified
in (a) above being converted to rupiah at the prevailing Bank of Indonesia
middle closing –dollar rupiah exchange rate on the business day prior to
the completion date.
3. Conditions
The Transaction is conditional upon, amongst other things:
a. the receipt by REA Kaltim of:
i. formal approval from Bank Mandiri to the sale of CDM; and
ii. formal agreement by Bank Mandiri to the termination and release
of the guarantees granted by the company and REA Kaltim in
respect of the obligations of CDM pursuant to the loan provided
by Bank Mandiri to CDM;
b. the conversion into additional capital in CDM of the loan balance of
$7.7 million owed by CDM to REA Kaltim; and
c. the subscription by REA Kaltim of further shares in REA Kaltim for an
aggregate subscription price equal to the monies required by CDM to
meet the statutory severance benefits due to all employees of CDM in
respect of the termination of their employment deemed to occur by
operation of Indonesian law on completion of the Transaction, and CDM
having paid such statutory severance benefits.
The net balance (if any) of monies advanced by REA Kaltim to CDM, in
excess of the capitalisations referred to above, will be waived.
Each of REA Kaltim and Telen has agreed to use its reasonable endeavours
to procure that all conditions to the Transaction are satisfied as soon as
practicable after the date of the agreement.
If completion has not occurred by 30 September 2025, then the share
purchase agreement will terminate. Telen may also terminate the sale and
purchase agreement in certain circumstances, including if any of the
representations or warranties given by REA Kaltim would, if repeated at
completion of the Transaction by reference to the facts and circumstances
then subsisting, be materially untrue or misleading or if the
implementation of the agreement becomes impossible for Telen.
4. Period pending completion
REA Kaltim has undertaken to Telen that, pending completion, REA Kaltim
will procure that, save as otherwise agreed, CDM will carry on business in
the ordinary course.
5. Completion
It is agreed that completion of the Transaction will take place on 4 June
2025 or, if later, the later of (x) the fifth business day following the
satisfaction of the conditions and (y) the 30th calendar day following the
date of the publication in an Indonesian newspaper of an announcement of
the sale in compliance with Indonesian law (or on such other date as REA
Kaltim and Telen may agree).
The purchase price will be payable in full in cash in rupiah on
completion.
6. Representations and warranties, compensation for breach of the
agreement and tax indemnity
REA Kaltim has given representations and warranties to Telen with regard
to CDM, and has agreed to compensate Telen from and against any losses
suffered by Telen as a result of any breach of any agreement, promise,
statement or guarantee by REA Kaltim under the agreement.
REA Kaltim and PT Kutai Mitra Sejahtera will also, pursuant to a separate
tax indemnification agreement to be signed at completion ("tax
indemnity"), agree to indemnify Telen against any outstanding tax
liabilities of CDM arising (x) in respect of the five years ended 31
December 2024 or (y) up to the completion date.
REA Kaltim's liability in respect of any claims under the agreement to
compensate is subject to an aggregate cap on liability of $22,400,000. REA
Kaltim's liability in respect of any claims under the tax indemnity is
subject to an aggregate cap on liability of a further $6,000,000. The
agreement to compensate is expressed to be binding on the parties for
three years; the tax indemnity is expressed to be effective and
enforceable only until 30 September 2030. Neither the sale and purchase
agreement nor the tax indemnity include other limitation on liability
provisions.
7. General
The sale and purchase agreement and the tax indemnity contain certain
standard provisions which would be considered customary in a sale and
purchase agreement / tax indemnity governed by English law (albeit, as
noted at paragraph 9 below, the two agreements are governed by Indonesian
law).
8. Language
The sale and purchase agreement and the tax indemnity have been prepared
in Indonesian, with an English translation. However, in the event of any
discrepancy between the English version and the Indonesian version, the
Indonesian version shall prevail.
9. Governing law and arbitration
The sale and purchase agreement and the tax indemnity are governed by
Indonesian law. The parties have agreed to refer any dispute arising in
relation to the sale and purchase agreement to arbitration in Singapore in
accordance with the Arbitration Rules of Singapore International
Arbitration Centre.
Appendix 2
Risk factors
The board believes the risks set out below to be the known material risk
factors relating to the Transaction. The information given is as of the
date of this announcement and, except as required by the Financial Conduct
Authority, the London Stock Exchange, the UK Listing Rules, or any other
applicable law, will not be updated. Shareholders should consider
carefully the risks and uncertainties described below, together with all
other information contained in this announcement.
The factors and risks described below relate only to the Transaction; they
do not relate to the group's business generally.
There may be other risks of which the board is not aware or which it
believes to be immaterial which may, in the future, be connected to the
Transaction and have a material and adverse effect on the business,
financial condition, results of operations or future prospects of the
continuing group.
1. Risks relating to the Transaction not completing
Although the directors are confident that the conditions to the sale and
purchase agreement will be satisfied, there is always the risk that they
are not or that, due to unanticipated circumstances, the Transaction
nevertheless does not proceed to completion. If the Transaction does not
proceed to completion, the group will not receive the consideration
payable by Telen. As a result, it may take longer or be more difficult for
the group to achieve the reduction in its net indebtedness and
strengthening of its balance sheet than can be expected as a result of the
Transaction. Moreover, if the group does not receive the consideration
payable by Telen, it may adversely affect the group's ability to meet debt
repayments falling due, which may have a detrimental impact on the group's
prospects.
If the Transaction does not proceed to completion, there can be no
guarantee that the company will be able to secure the sale of CDM to
another purchaser, or, if secured, that the terms of an alternative
transaction would be as favourable as the terms of the Transaction. The
company and management have already committed significant time to the
Transaction and the identification and negotiation of any alternative
transaction would require the duplication of much of the work involved.
This additional cost and management time, with no guarantee of a
successful resulting transaction, could have a detrimental impact on the
prospects of both CDM and the wider group.
Although every effort will be made to ensure that this does not happen,
were the statutory severance benefits due to all employees of CDM in
respect of the deemed termination of their employment on completion of the
Transaction (estimated at $855,000) to be paid and completion not to
occur, it may be difficult to recover the payments concerned resulting in
a loss to the group of the amount paid.
Were CDM to be retained by the group, the group would need to continue to
manage and invest in the business which, while likely beneficial to the
future prospects of CDM, would reduce the capital and management time
available for the group's other assets. Additionally, the failure of the
Transaction to complete could have a deleterious impact on the perceived
value of CDM and on the wider group's overall financial condition.
2. Risks relating to the Transaction completing
If the Transaction does, as is expected, complete, the continuing group's
agricultural operations will be more concentrated geographically within
one area in East Kalimantan. Whilst this has certain operational and
managerial benefits, it would also increase the relative impact of a
crystallisation of any of the group's normal operating risks, such as
adverse climatic factors, pests and diseases, disruption to river
transportation facilities and a breakdown in relations between the
continuing group and local communities, all of which may have a consequent
negative effect on the financial condition or results of the continuing
group.
The board believes that the Transaction will benefit the continuing group
by allowing it to focus its financial resources and management on
plantings concentrated within a smaller geographical area and that this
will permit economies of operation and consequent cost saving. However,
there can be no guarantee that these perceived benefits will be achieved
on a timely basis or at all. Any failure to realise the perceived benefits
could have an adverse impact on the financial condition and results of the
continuing group.
The sale and purchase agreement contains warranties and indemnities given
by REA Kaltim in relation to CDM. Although REA Kaltim has endeavoured to
ensure that fair disclosure has been made against the warranties and the
sale and purchase agreement contains limitations relating to the liability
of REA Kaltim in relation to any breach of warranty, there can be no
certainty that circumstances will not come to light, or events will not
arise, which may give rise to an unexpected successful warranty claim
against REA Kaltim. Any liability to make a payment arising from a
successful claim by Telen for breach of warranty would reduce the
consideration and could have an adverse effect on the cash flow and
financial condition of REA Kaltim and thus of the continuing group.
Appendix 3
Financial information re CDM
This Appendix sets out summary financial information for CDM and has been
extracted (without material adjustment) from the consolidation schedules
that underlie the audited consolidated financial statements of the company
as at and for the years ended 31 December 2022, 31 December 2023 and 31
December 2024.
The financial information has been prepared in accordance with the IFRS
accounting policies adopted in the 2024 annual financial statements. The
information has not been audited and does not constitute statutory
accounts within the meaning of section 434(3) of the Companies Act 2006.
The consolidated financial statements of the company as at and for the
three years ended 31 December 2024 were audited by MHA, a member firm
registered with the Institute of Chartered Accountants of England and
Wales and have been delivered to the Registrar of Companies in England and
Wales. The auditor's reports on those statements were unqualified and did
not contain any statements under section 498(2) or (3) of the Companies
Act 2006.
Income statement for each of the years ended 31 December 2022, 31 December
2023 and 31 December 2024
Full Year Full Year Full Year
2022 2023 2024
$’000 $’000 $'000
Revenue 5,070 6,832 9,082
Net (loss) / gain arising from changes in 47 3 (105)
fair value of biological assets
Cost of sales (6,664) (7,736) (7,967)
Gross profit (1,547) (901) 1,010
Distribution costs (2) (28) (21)
Administrative expenses (1,067) (1,275) (3,348)
Operating profit (2,616) (2,204) (2,359)
Investment revenues 6 13 13
Foreign exchange (loss) / gain (241) 59 558
Finance costs (2,356) (4,820) (3,707)
Loss before tax (5,208) (6,951) (5,495)
Tax (364) 1,364 4,599
Loss for the year (5,572) (5,587) (897)
Attributable to:
Equity shareholders (5,572) (5,587) (897)
To aid comparison between periods, the 2023 and 2024 figures exclude,
respectively, an impairment charge of $23.6 million and a partial release
of that charge of $4.0 million.
Balance Sheets as at 31 December 2023 and 2024
December December
2023 2024
$’000 $’000
Non-current assets
Property, plant and equipment 17,647 17,253
Land 4,467 4,467
Financial assets 1,476 4,963
Deferred tax assets 1,583 5,510
Total non-current assets 25,173 32,194
Current assets
Inventories 1,477 1,143
Biological assets 242 120
Loan to REA Kaltim 40,723 –
Trade and other receivables 1,147 769
Current tax asset 188 93
Cash and cash equivalents 49 434
Total current assets 43,826 2,559
Total assets 68,999 34,752
Current liabilities
Trade and other payables (809) (798)
Bank loans – (295)
Other loans and payables (172) –
Total current liabilities (981) (1,093)
Non-current liabilities
Bank loans – (15,173)
Loan from DSN (10,641) –
Loan from REA Services (60,297) –
Loan from REA Kaltim – (7,665)
Unamortised loan expenses 142 123
Other loans and payables (357) (385)
Total non-current liabilities (71,153) (23,099)
Total liabilities (72,134) (24,192)
Net assets (3,135) 10,560
Equity
Share capital 42,936 53,528
Retained earnings (46,071) (42,968)
Total equity (3,135) 10,560
The 31 December 2023 balances of CDM were all included in assets held for
sale and liabilities relating to assets held for sale within the group
balance sheet. The assets above are stated after allocation of the group
impairment.
Appendix 4
Additional information
1. Presentation of information
This announcement includes statements that are, or may be deemed to be,
forward-looking statements, beliefs or opinions, including statements with
respect to the company's business, financial condition and results of
operations. These forward-looking statements can be identified by the use
of forward-looking terminology, including the terms "believes",
"estimates", "plans", "anticipates", "targets", "aims", "continues",
"expects", "intends", "hopes", "may", "will", "would", "could" or "should"
or, in each case, their negative or other various or comparable
terminology. These statements are made by the company's directors in good
faith based on the information available to them at the date of this
announcement and reflect the company's directors' beliefs and
expectations. By their nature these statements involve risk and
uncertainty because they relate to events and depend on circumstances that
may or may not occur in the future. A number of factors could cause actual
results and developments to differ materially from those expressed or
implied by the forward-looking statements. No representation or warranty
is made that any of these statements or forecasts will come to pass or
that any forecast results will be achieved. Forward-looking statements
speak only as at the date of this announcement and the company and its
advisers expressly disclaim any obligations or undertaking to release any
update of, or revisions to, any forward-looking statements in this
announcement. As a result, readers of this announcement are cautioned not
to place any undue reliance on such forward-looking statements.
Nothing in this announcement is intended as a profit forecast or estimate
for any period and no statement in this announcement should be interpreted
to mean that earnings or earnings per share or dividend per share for the
company for the current or future financial years would necessarily match
or exceed the historical published earnings or earnings per share or
dividend per share for the company.
References in this announcement to dollar amounts that have been converted
have been converted as follows:
(1) rupiahs to dollars: at the rate extrapolated from the Foreign Exchange
Reference Rate – Jakarta Spot Dollar Middle Rate published by Bank
Indonesia as being the rate for the relevant date; and
(2) sterling to dollars: at the rate extrapolated from the Daily Spot Rate
published by the Bank of England as being the rate for dollars against
sterling for the relevant date.
Unless the context otherwise requires, the relevant date for the above
purposes for dollar equivalent amounts shown in respect of rupiah and
sterling balances is 17 April 2025 (being the latest practicable date
prior to the publication of this announcement).
2. Material contracts
The continuing group
The following contracts, not being contracts entered into in the ordinary
course of business, (x) have been entered into by a member of the
continuing group during the two years preceding the date of this
announcement or (y) have been entered into by a member of the continuing
group at any time and may contain a provision under which any member of
the continuing group has an obligation or entitlement and which, in either
case, is or may be material to the continuing group as at the date of this
announcement and contain provisions of which holders of securities of the
company may reasonably require to have knowledge for the purposes of
making a properly informed assessment of the Transaction and its impact on
the continuing group:
a. a notarial deed dated 16 August 2024 pursuant to which REA Kaltim
subscribed $10 million of additional capital in CDM;
b. a corporate guarantee dated 30 August 2024 pursuant to which REA
Kaltim guaranteed the obligations of CDM pursuant to the facility
agreement referred to at paragraph 2.2(b) below;
c. a cash flow deficit guarantee also dated 30 August 2024 pursuant to
which REA Kaltim guaranteed the debt service obligations of CDM
falling due pursuant to the facility agreement referred to at
paragraph 2.2(b) below;
d. a corporate guarantee dated 2 October 2024 pursuant to which the
company guaranteed the obligations of CDM pursuant to the facility
agreement referred to at paragraph 2.2(b) below;
e. a loan agreement dated 1 December 2024 and made between (i) REA Kaltim
(as lender) and (ii) CDM (as borrower), pursuant to which REA Kaltim
has provided a loan to CDM in the amount of $7.7 million; the loan is
unsecured and bears interest at 3 per cent per annum; and
f. the sale and purchase agreement as summarised in Appendix 1 (Terms of
the sale and purchase agreement).
CDM
The following contracts, not being contracts entered into in the ordinary
course of business, (x) have been entered into by CDM during the two years
preceding the date of this announcement or (y) have been entered into by
CDM at any time and may contain a provision under which CDM has an
obligation or entitlement and which, in either case, is or may be material
to CDM as at the date of this announcement and contain provisions of which
holders of securities of the company may reasonably require to have
knowledge for the purposes of making a properly informed assessment of the
Transaction and its impact on the continuing group:
a. the agreement summarised in paragraph 2.1(a) above;
b. a facility agreement dated 29 August 2024 and made between (i) Bank
Mandiri (as lender) and (ii) CDM (as borrower), pursuant to which Bank
Mandiri provided to CDM an investment credit facility in the amount of
Rp 250 billion, of which Rp 248.75 billion ($14.77 million) is
currently outstanding, repayable in instalments from March 2025 to
June 2034 (or earlier in the event of default); the facility bears
interest at 8.5 per cent per annum payable monthly; in addition, an
annual maintenance fee of 0.15 per cent is payable; CDM has agreed
certain financial covenants under the agreement relating to debt
service coverage, debt equity ratio, EBITDA margin (from 2027), the
maintenance of positive net income (from 2027) and positive net
equity; such covenants are tested annually upon delivery to Bank
Mandiri of the audited financial statements in respect of each year by
reference to CDM's results for, and closing financial position as at
the end of, that year; CDM's obligations under the agreement are
secured by charges over substantially the whole of its assets and
undertaking; and
c. the agreement summarised in paragraph 2.1(e) above.
3. Litigation
The continuing group
There are no governmental, legal or arbitration proceedings (including any
such proceedings which are pending or threatened of which the company is
aware) which may have, or have had during the twelve months preceding the
date of this announcement, a significant effect on the company and/or the
continuing group's financial position or profitability.
CDM
There are no governmental, legal or arbitration proceedings (including any
such proceedings which are pending or threatened of which the company is
aware) which may have, or have had during the twelve months preceding the
date of this announcement, a significant effect on CDM and/or CDM's
financial position or profitability.
4. Significant change
The continuing group
There has been no significant change in the financial position of the
continuing group since 31 December 2024, being the end of the last
financial period for which financial information has been published.
CDM
There has been no significant change in the financial position of CDM
since 31 December 2024, being the end of the last financial period for
which financial information has been published.
5. Related party transactions
Save as regards (i) transactions in respect of which details have been
previously published and (ii) the remuneration of management personnel
details of which have been previously published up to 31 December 2024 and
the nature of which has not changed since that date, the company has not,
during the period from 1 January 2023 and up to the date of this
announcement, entered into any related party transaction. For this
purpose, "related party transaction" has the meaning set out in the
Applicable Accounting Standards, being (for financial years beginning on
or after 1 January 2021) the UK adopted international accounting
standards.
6. Other
No persons are proposed to be appointed as directors of the company in
connection with the Transaction.
There are no key individuals important to the business of CDM.
Appendix 5
Definitions
Unless the context otherwise requires, the following definitions apply
throughout this announcement:
"2024 CDM audited financial the audited financial statements of CDM as at
statements" and for the financial year ended on, 31
December 2024, including the notes thereto
as amended, modified and/or supplemented from
"as amended" time to time up to the date of this
announcement
"Bank Mandiri" PT Bank Mandiri Tbk, the group's Indonesian
lending bank
"board" the board of directors of the company
PT Cipta Davia Mandiri, a wholly owned
subsidiary of REA Kaltim (and thus also a
"CDM" subsidiary of the company) incorporated in the
Republic of Indonesia and engaged in the
cultivation of oil palms
"company" R.E.A. Holdings plc
"continuing group" the company and its subsidiaries other than
CDM
"directors" the directors of the company and "director"
means any one of them
PT Dharma Satya Nusantara Tbk, an Indonesian
"DSN" company listed on the Indonesia Stock Exchange
and engaged in the businesses of oil palm
plantations, wood products and timber estates
"DSN group" DSN and its subsidiaries
"FFB" oil palm fresh fruit bunches
"Financial Conduct the Financial Conduct Authority of the UK in
Authority" its capacity as the competent authority for
the purposes of Part VI of FSMA
"FSMA" the Financial Services and Markets Act 2000 of
England and Wales, as amended
"group" the company and its subsidiaries
the UK adopted International Financial
Reporting Standards as applied in accordance
"IFRS" with the provisions of the Companies Act 2006
as applicable to companies reporting under
those standards
"MHA" MHA Audit Services LLP (and its predecessor,
MacIntyre Hudson LLP) the company's auditor
amounts receivable by CDM from oil palm
"plasma receivables" developments owned, or to be owned, by local
village cooperatives but managed by CDM on
behalf of such cooperatives
PT REA Kaltim Plantations, the principal
operating subsidiary of the company,
incorporated in the Republic of Indonesia and
"REA Kaltim" engaged in the cultivation of oil palms and
the processing of oil palm fruit, being, as at
the date of this announcement, the holding
company of all of the agricultural operations
of the group
R.E.A. Services Limited, a wholly owned
"REA Services" subsidiary of the company incorporated in
England and Wales
the sale and purchase agreement dated 22 April
"sale and purchase 2025 made between (i) REA Kaltim and (ii)
agreement" Telen, a summary of which is included in
Appendix 1 (Terms of the sale and purchase
agreement)
PT Teladan Prima Agro Tbk, an Indonesian
"Telen" company listed on the Indonesia Stock Exchange
and engaged in the business of oil palm
cultivation
the proposed sale by REA Kaltim of CDM to
"Transaction" Telen of the whole of the issued and to be
issued share capital of CDM, details of which
are set out in this announcement
the United Kingdom Listing Rules made by the
Financial Conduct Authority under Part VI of
"UK Listing Rules" FSMA, as set out in the Financial Conduct
Authority's Handbook of Rules and Guidance as
amended
References in this announcement to "dollars" and "$" are to the lawful
currency of the United States, references to "sterling", "£" and "p" are
to the lawful currency of the United Kingdom and references to "rupiah"
and "Rp" are to the lawful currency of the Republic of Indonesia.
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Dissemination of a Regulatory Announcement that contains inside
information in accordance with the Market Abuse Regulation (MAR),
transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
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ISIN: GB0002349065
Category Code: DIS
TIDM: RE.
LEI Code: 213800YXL94R94RYG150
Sequence No.: 383917
EQS News ID: 2121416
End of Announcement EQS News Service
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