Hardman & Co Research: An Elegant Solution

The announcement of an improving set of full year results for 2017 was complemented by the announcement that REA Kaltim (REAK) had entered into a conditional agreement for the sale of a 95% holding in the PBJ estate to KLK. Expected gross proceeds of $85m are anticipated to evolve at ca.$57m net of repayment of external borrowings and transaction costs. This represents an elegant solution to de-leveraging the balance sheet, focusing on a more contiguous plantation area, and freeing up capital for the remaining landbank. The transaction value compares favourably with market valuations of strongly performing Indonesian operators.

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