Tuesday, January 29, 2013

Golden Agro Growers Scheme

Just when we see the news of Country Heights Grower Scheme (CHGS) proposing for a voluntary termination of the investment scheme, Golden Agro Plantation Sdn. Bhd. is coming up with a very similar scheme to this CHGS, let us see what we have on the news article for Golden Agro Growers Scheme.

KUALA LUMPUR: Golden Agro Plantation Sdn Bhd has allocated 70% of the grower plots, or 29,240 plots, to the public to participate in its Golden Agro Growers Scheme.
Its chief executive officer, Datuk Allan Lim Kim Huat, said the management would retain 30% of the plots in the plantation in Mukah, Sabah.
"Each plot is equivalent to 1/4 acre and will be offered at RM8,000 each. "The scheme offers a guaranteed 7% returns for the first five years (projected at different palm oil prices).
"Currently, the price for the commodity is around RM2,300 a tonne," he said at the soft launch of the scheme here on Tuesday.
Lim said one ha of oil palm could produce four to 5.5 tonnes of crude palm oil (CPO) annually, which made it five to 10 times more efficient than any other commercially-known oil crop on a per ha basis.
He said Malaysia accounted for 39% of the total CPO production and 44% of total world exports.
"If we take into account all other oils and fats produced in the country, Malaysia accounts for 12% and 27% of the world's total production and exports of oils and fat respectively.
"Therefore, as one of the largest producers and exporters of palm oil products worldwide, Malaysia has a very important role to play in fulfilling the rapidly-expanding global demand for oils and fats," he said.
He said the Companies Commission of Malaysia has approved the scheme.
Subject to availability of the plots, there was no limit to the number of plots each investor could subscribe to.
"The plots are freely transferable after two years," he said.
Lim said 100% of the audited net profit would be distributed from year six onwards until the maturity of the plantation in 20 years.
The share of net proceeds from the sale of plantation land then would be distributed upon maturity, he said.
On the choice of the land in Mukah, he said, there was no need for investors to worry as the land was safe and free from the wild animals. - Bernama

And earlier on, let us review a news article regarding for the CHGS.

PETALING JAYA: Disgruntled investors of Country Heights Grower Scheme (CHGS) are rallying together to demand for the adjournment of a general meeting to be held early next month on the eve of Chinese New Year in relation to the proposed voluntary termination of the investment scheme.

Taking their concern to the social media space, this group of disgruntled investors have called for urgent meetings among themselves in several locations nationwide, including Penang, Ipoh and Petaling Jaya, to discuss their course of action against the proposed voluntary termination of the investment scheme. A Facebook page had also been created under the name “CHGS Group” in the hope of getting more disgruntled investors to voice their opinion.

“Our intent is firstly to gather enough proxy support to call for the adjournment of the general meeting,” Michael Khor told StarBiz over the telephone.

“To get the adjournment, we need 50% of the vote We hope investors can give their proxies because we feel that the date of the meeting is purposely timed to push through the resolution to terminate this pioneer scheme,” he added.

Khor is from Ipoh. He has been an investor of CHGS since early 2008.

To recap, Plentiful Gold-Class Bhd, the management company of CHGS, last week issued a circular notifying investors of a plan to terminate the grower scheme, and a general meeting to be held on Feb 8 in relation to the proposal.

Plentiful Gold-Class is a wholly owned subsidiary of Bee Garden Holdings Sdn Bhd, a company in which Puan Sri Tan Bee Hong, wife of Tan Sri Lee Kim Yew, is a shareholder. (Lee is the founder of property development and management company Country Heights Holdings Bhd. He also sits on the board of Plentiful Gold-Class.)

According to the circular, the rationale for the proposed voluntary termination is that the scheme had encountered various challenges that had severely affected the development and operation of the plantation. These included unpredictable weather conditions, incursions of wild elephants into the plantation, poor soil fertility, shortage of key personnel and manual workers, and uncompromising terrain.

CHGS was established in March 2007 with a supposed maturity period of 23 years. The scheme involved selling plots of oil palm to retail investors. It guaranteed a return of 8% for the first three years (or planting phase). Subsequent return for the remaining 20 years would depend on the market price of crude palm oil (CPO). The scheme also claimed to provide capital appreciation to investors at the end of the maturity period.

Under the proposed voluntary termination of CHGS, the board of Plentiful Gold-Class had said it would refund in full the grower's fee to the respective grower or investor in cash over a period of two years. The first tranche of refund involved 10% of the grower's fee within 30 days upon approval of the proposed voluntary termination of CHGS, while the remainder 90% would be paid out within a period of two years from the date of approval.

According to Khor, disgruntled investors are not only unhappy with timing of the general meeting, but they are also dissatisfied with the terms of refund. “The terms of repayment are very unfavourable,” Khor said, pointing to the “long” period of repayment for the remaining 90% of grower's fees to investors.

“We prefer an adjournment (of the general meeting) for better terms to be given or negotiated,” Khor added.

Meanwhile, the proposed voluntary termination of CHGS had also caught the attention of the Minority Shareholder Watchdog Group (MSWG). In her commentary last week, MSWG chief executive officer Rita Benoy Bushon asked: “Why the rush to terminate when the prevailing average CPO price is still hovering around RM2,300 per tonne, which is above the minimum RM800 per metric tonne?”

Rita also questioned the timing of the general meeting, saying: “What was the reason for fixing the general meeting date a day before the Chinese New Year's celebration, given the expected long holiday?”

Rita also pointed out that there was doubt over the recoverability of the grower's fee, considering the fact that there was a shortfall between grower's fee payable of RM215mil (contributed by the subscribers) and the underlying value of the land at RM129mil as highlighted by independent adviser Ferrier Hodgson.

Generally the concept of the scheme is good in my very personal view, and for CHGS case, the investors already have their interest paid for the past few years and they will get their full refund for their initial investment capital (as my understanding) within 2 years.

Investor technically consider not incur losses, but since the full refund is taking 2 years time, any balance which is not fully paid to the investors, will they be interest to be paid for the investors, as if the investors get the refund earlier enough, they might have put their capital into the instrument that have a return.

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