Felda Global Ventures Holdings Bhd (FGV), the world’s biggest crude palm oil producer, plans to start new discussions to buy a stake in Indonesia’s PT Eagle High Plantations in the first quarter after aborting an earlier plan for a US$680 million (RM2.89 billion) deal.

Bearish crude palm oil prices and a weakening ringgit “forced us to renegotiate the deal,” chief executive officer Mohd Emir Mavani Abdullah said in an interview in Kuala Lumpur on Monday. “Indonesia is still very important to us, compared to other countries.”

FGV and Eagle High reached a preliminary agreement on June 12 for a 37 percent stake and planned to announce a final pact by mid-August, a deadline that has since been extended twice to the end of November.

Since the first deal, the ringgit has fallen 12 percent, while crude palm oil prices have fallen 6.9 percent.

FGV and Eagle High are still keen to pursue a deal and renegotiation will involve issues such as the size of the stake, pricing and the partnership in areas such as research and development, Mohd Emir Mavani said, declining to be specific.

Both parties may restart discussions in the first quarter when “there is more certainty” on market conditions, he said.

Lower price

FGV may be looking for a lower price to take into account issues discovered during due diligence on the Indonesian company, two people with knowledge of the matter said in September.

Felda shares dropped to a record low of RM1.19 in August after opposition lawmakers and analysts said the company was overpaying for the purchase. The stock has since recovered to trade at RM1.77 in Kuala Lumpur on Monday, though is still down 19 percent this year. Eagle High has fallen 65 percent this year to 141 rupiah.

FGV, whose cash coffers halved to RM2.1 billion as of the end of September from RM5.7 billion in 2012, is considering raising debt to finance the purchase, Mohd Emir Mavani said in July.

The debt, which would lift the company’s gearing to 1:1, could be in the form of loans or bonds, whichever is most cost-effective, he said.

FGV had RM5.1 billion of debt as of the end of September, according to data compiled by Bloomberg . The Malaysian palm oil producer reported a nett loss that widened to RM33.9 million in the third quarter from RM9.3 million a year earlier because of lower palm oil prices and foreign-exchange losses arising from the weakening ringgit.

The company has operations in more than 10 countries across Asia, North America and Europe including upstream and downstream palm oil, rubber, sugar and logistics.

Rajawali, one of Indonesia’s largest conglomerates, owns 65.5 percent of Eagle High, according to data compiled by Bloomberg .

Eagle High, through its subsidiaries, has rights to a total area of about 419,000ha of land and plantations in Kalimantan, Sulawesi, Papua and Sumatra provinces in Indonesia, its website shows.

- Bloomberg