PAL Equatorial Palm Oil Plc

 

TIDMPAL 
 
RNS Number : 1633S 
Equatorial Palm Oil plc 
06 September 2010 
 

    Equatorial Palm Oil plc / Index: AIM / Epic: PAL / Sector: Food Producers 
6 September 2010 
                Equatorial Palm Oil plc ('EPO' or 'the Company') 
                     US$60 million development JV agreement 
 
Equatorial Palm Oil plc, the AIM listed and Liberia focussed sustainable oil 
palm plantation developer, is pleased to announce that it has signed a 
Memorandum of Understanding ('MOU') with Biopalm Energy Ltd ('Biopalm Energy'), 
to form a US$60 million 50:50 Joint Venture company ('the JV') in order to 
accelerate the development of EPO's c.169,000 hectare land position and palm oil 
operations in Liberia.  Biopalm Energy subscribed for GBP5 million of new equity 
in the Company in May of this year and is a wholly owned subsidiary of Siva 
Ventures Ltd, part of the Indian conglomerate Siva Group. 
 
Under the terms of the MOU, which is legally non-binding, Biopalm Energy will 
invest an initial US$22.5 million in cash plus arrange and guarantee a US$30 
million loan facility to the JV, while EPO will contribute US$7.5 million in 
cash to the JV which will, on completion, hold all of EPO's current land 
position in Liberia.  The establishment of the JV will be subject to EPO 
shareholder and necessary regulatory approvals. 
 
EPO has a strategic development plan to plant 50,000 hectares of oil palm 
plantation within 10 years, targeting crude palm oil ('CPO') production of 
250,000 tpa (current palm oil price US$925 per tonne CIF Rotterdam), increasing 
to 100,000 hectares planted.  Initial production of CPO is planned to commence 
in Q4 2010 with the Company's first palm oil processing mill already under 
construction.  It is envisaged that the additional finance will enable all 
operations across the three plantation areas of Palm Bay, Butaw and River Cess, 
as well as the active out grower programme, to be fast tracked.  Investment in 
associated and downstream infrastructure will also be accelerated. 
 
Upon finalisation of a legally binding JV agreement, a circular will be 
published and sent to the Company's shareholders highlighting the key terms of 
the agreement, providing further information on the development objectives aimed 
at maximising the value of EPO's Liberian operations, and convening a general 
meeting of the Company to vote on the JV. 
 
EPO Chairman Michael Frayne said, "This funding agreement with the Siva Group is 
fantastic news for the Company as it will significantly mitigate the financial 
risk attached to the project.  Importantly it will allow us to focus on our 
strategic objectives in developing our 169,000 hectare land position which is 
located between leading oil palm plantation developers Sime Derby and Golden 
Agri, in what is emerging as a prime oil palm development region. 
 
"The Siva Group has an excellent track record of working with investment 
partners to unlock value to the benefit of shareholders and this JV solidifies 
our relationship as we work together to achieve our longer term objectives. 
 
"We have already made significant strides forward in our development plan with 
the establishment of nurseries and the construction of our first mill which is 
underway.  We will now accelerate our activities as we build a West African 
focussed palm oil company." 
 
                                  * * ENDS * * 
 
 For further information please visit www.epoil.co.uk or contact: 
+--------------+---------------------------+-------------------+ 
| Michael      | Equatorial Palm Oil plc   | Tel: 020 7766     | 
| Frayne       |                           | 7555              | 
+--------------+---------------------------+-------------------+ 
| Peter Krens  | Mirabaud Securities LLP   | Tel: 020 7484     | 
|              |                           | 3510              | 
+--------------+---------------------------+-------------------+ 
| Pascal Keane | Shore Capital & Corporate | Tel: 020 7408     | 
|              | Limited                   | 4090              | 
+--------------+---------------------------+-------------------+ 
| Edward       | Shore Capital & Corporate | Tel: 020 7408     | 
| Mansfield    | Limited                   | 4090              | 
+--------------+---------------------------+-------------------+ 
| Hugo de      | St Brides Media & Finance | Tel: 020 7236     | 
| Salis        | Ltd                       | 1177              | 
+--------------+---------------------------+-------------------+ 
| Elisabeth    | St Brides Media & Finance | Tel: 020 7236     | 
| Cowell       | Ltd                       | 1177              | 
+--------------+---------------------------+-------------------+ 
 
Notes to editors: 
 
About Equatorial Palm Oil 
EPO's objective is to become a producer of sustainable, low-cost CPO and to this 
end it has operations located near the coast in Liberia, West Africa.  The 
Company's operational strategy is expected to be implemented through three core 
business activities: the rehabilitation of existing oil palm plantations; the 
development of new plantations; and the development of out-grower small 
holdings.  The Company has secured Government ratified Investment Agreements in 
Liberia for the investment, rehabilitation and participation by the Group over a 
sizeable acreage of existing oil palm plantations.  EPO's operations have 
already commenced at the Butaw Plantation and Palm Bay Plantation. 
 
About The Siva Group 
Founded in 1986 by Mr. C Sivasankaran, The Siva Group is a Chennai based US$3 
billion Indian conglomerate, with over 3,000 employees and operations in Realty, 
Telecom, Project Engineering, Shipping, Renewable Energy, Agriculture and 
e-education/software.  The Siva Group's diverse businesses are focussed on 
performance, competitiveness, value creation and customer-orientation.  While 
simultaneously strengthening its traditional base, the Group is centred on 
identifying new business opportunities including agriculture.  Given its global 
footprint, the Group is now aggressive in incorporating international expansion 
possibilities into its growth plans. 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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