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REG-R.E.A. Holdings plc R.E.A. Holdings plc: Sale of shareholding in PBJ

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   R.E.A. Holdings plc (RE.)
   R.E.A. Holdings plc: Sale of shareholding in PBJ

   25-Apr-2018 / 11:00 GMT/BST
   Dissemination of a Regulatory Announcement that contains inside
   information according to REGULATION (EU) No 596/2014 (MAR), transmitted by
   EQS Group.
   The issuer is solely responsible for the content of this announcement.

   ══════════════════════════════════════════════════════════════════════════

   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

   FOR IMMEDIATE RELEASE

                          R.E.A. Holdings plc ("REA")

              Sale of shareholding in PT Putra Bongan Jaya ("PBJ")

   REA is pleased to announce that its subsidiary, PT REA Kaltim Plantations
   ("REA Kaltim"), has entered into a conditional agreement for the sale of
   REA Kaltim's 95 per cent interest in PBJ to Kuala Lumpur Kepong Berhad
   ("KLK").  The agreement is conditional upon REA shareholder approval,
   necessary regulatory consents in Indonesia and the consent of REA Kaltim's
   lending bank.

   Highlights

     • The disposal enables the group to release the intrinsic value that has
       built up in developing PBJ, which, as a recently planted property, has
       excellent potential but is not currently profitable. 

    

     • The sale is expected to realise gross proceeds of approximately $85
       million and net proceeds of approximately $57 million after repayment
       of external borrowings and net of selling expenses.
        
     • The divestment will benefit the group's capital structure by reducing
       indebtedness and by relieving the group of the further investment that
       would be required to take the PBJ estates to full maturity; it will
       also defer for at least three years the need for a further group oil
       mill.
        
     • The divestment will permit the group to focus its efforts on its
       remaining plantings which are concentrated within a single
       geographical area.
        
     • There will be no material negative impact on the immediate outlook for
       the REA group's financial performance. 

   Details

   PBJ is an Indonesian company which owns an oil palm plantation located in
   the Kutai Barat Province of East Kalimantan.  The plantation is based on a
   fully titled area (held under an Hak Guna Usaha) of 11,602 hectares and an
   additional land allocation subject to completion of titling (held under an
   Izin Lokasi) of 4,460 hectares.  At completion of the sale, it is
   projected that 7,482 hectares of land will have been planted by PBJ for
   its own use, of which 810 hectares will be mature and the balance
   immature.  A further 635 hectares is projected to have been planted for
   smallholder schemes managed by PBJ for the benefit of local communities.

   The consideration, which is payable in cash, for the PBJ shares the
   subject of the sale will be 95 per cent of the value ascribed at
   completion to the underlying assets and liabilities of PBJ.  For this
   purpose, the assets and liabilities of PBJ will be valued as follows:

   (a)    land and plantings, plant and equipment and other non current
   assets (other than advances to cooperatives) at $80 million;

   (b)    borrowings by PBJ from its lending bank at the principal amount
   outstanding at completion (together with accrued interest and any early
   repayment penalty);

   (c)     amounts owing by PBJ to the REA group at the principal amount
   outstanding at completion (together with accrued interest but net of
   certain balances due from other REA group companies): and

   (d)    working capital (taken to comprise current assets and liabilities
   (other than as included in (b) or (c) and deferred tax), plasma advances
   and employee benefit obligations.

   Had completion occurred at 31 December 2017, the aggregate of (a) to (d)
   above would have amounted to $24.4 million and the cash consideration for
   the 95 per cent shareholding in PBJ to $23.2 million.  KLK is depositing
   with REA Kaltim, by way of an advance of the purchase price, the sum of $8
   million.  Should the agreement for the sale of REA Kaltim's interest in
   PBJ not become unconditional, such amount will be repayable.

   As a term of the transaction, KLK has agreed that on completion of the
   sale it will repay the amounts owing at (b) and (c) above.  The amount
   owing at (b) is projected to amount to approximately $26 million at
   completion.  The net proceeds to the group will therefore comprise the
   consideration for the 95 per cent shareholding in PBJ and the amount
   repaid in respect of (c) which are together expected to amount, net of
   expenses, to approximately $57 million.

   Completion is not expected to occur before 31 August 2018 and the
   agreement will lapse if all conditions have not been satisfied prior to 31
   January 2019.  Should the area planted by PBJ for its own use by the later
   of completion and 30 September 2018 fall short of the projected 7,482
   hectares, any shortfall will result in a reduction of the value at (a)
   above by $8,000 per hectare.  The area currently planted by PBJ for its
   own use is estimated at 7,062 hectares.

   KLK has agreed that REA Kaltim may invite a small number of existing staff
   at PBJ to transfer to REA Kaltim's employment.  KLK has also undertaken to
   procure that PBJ will offer continued employment to substantially all of
   PBJ's other employees.

   KLK has also agreed to the continued use by a subsidiary of REA of a small
   area of PBJ used by the subsidiary for crushing stone from the limestone
   quarry adjacent to PBJ in respect of which the subsidiary has an exclusive
   supply arrangement.  KLK will procure that PBJ offers the subsidiary first
   refusal on all future contracts for the supply of stone to PBJ.

   The proceeds of the sale of the PBJ shares and the repayment of monies
   owed by PBJ to the REA group will be applied in reduction of REA group
   indebtedness. 

   The gross assets of PBJ to be included in the REA group accounts at 31
   December 2017 will be $77.3 million and the net assets (after deduction of
   the 5 per cent non controlling shareholder interest) will be $51.2
   million.  Loss before tax so to be included will be $0.2 million.

   The sale of PBJ constitutes a class 1 transaction for REA under the
   Financial Conduct Authority's Listing Rules and, accordingly, a circular
   containing further information on the sale, together with a notice
   convening a general meeting, will be sent to REA shareholders in due
   course.

    

   Enquiries:

   David Blackett

   Chairman

   R.E.A. Holdings plc    

   Tel: 020 7436 7877

    

    

    

    

    

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   ISIN:          GB0002349065
   Category Code: DIS
   TIDM:          RE.
   LEI Code:      213800YXL94R94RYG150
   Sequence No.:  5456


    
   End of Announcement EQS News Service

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   678909  25-Apr-2018 

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