* Restructuring to include loans, transfer of land assets
* "Aggressive timeline" for plantation, property listings
* Q2 profit more than doubles
(Recasts with restructuring details, company comments)
By Emily Chow
KUALA LUMPUR, Feb 27 Malaysian conglomerate Sime
Darby Bhd on Monday said it would restructure itself
to ensure "an optimal capital structure" for the plantations and
property businesses that it plans to spin off.
Restructuring will involve group debt, capitalisation of
inter-company loans, and the transfer of assets including land,
it said. The process would involve working with credit-rating
firms, lenders and creditors, it said.
The announcement comes after the conglomerate in January
said it would list the businesses separately on the local stock
exchange to enhance shareholder value. Sime Darby Bhd will
retain its industrial, motors, logistics and healthcare
"We're working hard to hit an aggressive timeline, maybe by
the end of this year, if not early next year," group Chief
Executive Officer Mohd Bakke Salleh told reporters after the
conglomerate reported second-quarter profit that more than
Bakke said Sime Darby will distribute shares in the two
resulting companies to existing shareholders and that there
would be no initial public offering to raise any funds. Sime
Darby Bhd will not own any shares in the pair.
Sime Darby's plantations and property arms accounted for
nearly 70 percent of the conglomerate's profit for the 2016
The restructuring comes after analysts and credit-ratings
firms expressed concern over its plan to spin off the
Moody's Investors Service placed Sime Darby on review for a
credit-rating downgrade earlier this month following the
decision to list the two divisions.
Sime Darby's plantation business - its most profitable unit,
featuring the world's largest palm oil operation by land size -
shielded the weaker property and logistics divisions, and
spinning it off could leave the conglomerate vulnerable,
PROFIT MORE THAN DOUBLES
Earlier on Monday, Sime Darby said second-quarter profit
rose to 644 million ringgit ($145.01 million) for the three
months through December, from 285 million ringgit a year prior,
buoyed by improved production and higher palm oil prices.
Revenue rose 4.2 percent to 12.3 billion ringgit.
Benchmark Malaysian palm oil futures surged 18
percent over the last three months of 2016, hitting a four-year
high of 3,202 ringgit per tonne.
On Monday, CEO Bakke said he expected a price of 2,900
ringgit to 3,000 ringgit per tonne over March and April.
"The (crude palm oil) price increase was mainly driven by an
industry-wide production deficit due to the lingering effects of
2015's El Nino weather phenomenon," Sime Darby said in a
The weather event, which brings scorching heat across
Southeast Asia, curbed palm yields in top growers Indonesia and
Malaysia last year.
($1 = 4.4410 ringgit)
(Reporting by Emily Chow; Writing by A. Ananthalakshmi; Editing
by Christopher Cushing)