From Government of Indonesia

Indofood Agri to Spend $215m on Expansion

PT Indofood Agri-Resources, the plantation arm of conglomerate PT Indofood, will invest up to $215 million to boost its oil palm plantations and crude palm oil (CPO) refining capacity in the next two years.

The company will spend between $50 million and $55 million to increase its CPO refining output to 970,000 tons annually by 2009 by expanding the capacity at two of its refineries in Jakarta and Medan.

On top of that, it is spending $160 million to plant new palm trees on an additional 70,000 hectares of land over the next two years, Mark Wakeford, head of investor relations at Indofood Agri, said in an interview with XFN-Asia.

Indofood Agri has an annual CPO output of 300,000 tons. That should more than double to 640,015 tons once Indofood Agri completes the acquisition of palm oil producer PT PP London Sumatra by the end of this year. The company is currently conducting due diligence on London Sumatra.

The plan is to buy an initial 64.4% of London Sumatra from various controlling shareholders, including First Durango and the Ashmore Funds, for about S$1 billion. Indofood Agri will make a tender offer for the rest of London Sumatra for another S$600 million.

"The acquisition will strengthen IndoAgri's integrated plantation business model by expanding our core plantation business," Wakeford said.
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