Under this transaction, a bankruptcy remote special purpose vehicle, ABS Plantation Assets Berhad (ABS), will acquire the plantation properties from Benta Plantations (Perak) Sdn. Bhd. (BPSB) and its subsidiaries (sellers) and subsequently lease the properties to the sellers for the benefit of noteholders. The purchase of the properties will be funded by proceeds from issuance of RM95 million Bai Bithaman Ajil debt securities (Notes) and up to RM80 million subordinated debt. Repayment of the Notes and subordinated debt will be funded by periodic lease payments made by the lessees (also the sellers) to ABSP as well as proceeds from either the repurchase option should it be exercised by Multi Vest or sale of plantation properties to third parties. The sale of plantation properties has been structured as true-sale for legal purposes with the rights in, title to and interest in the plantation properties being transferred to ABSP.

MARC has assigned AAAID and AAID to ABSP’s RM50 million Class A and RM45 million Class B notes respectively. The ratings reflect the quality of the plantation properties; the structural features incorporated into the transaction; irrevocable guarantee provided by Multi Vest in respect of the periodic lease payments; and reasonably low actual LTVs for each of the Class A and B Notes owing to the serial redemption structure of the Notes. The proposed transaction incorporates a serial redemption on Class A and Class B notes commencing six months and eighteen months from issuance date, respectively. This essentially results in increasing collateral protection as the transaction progresses towards maturity. Of the RM95.0 million of Class A and Class B notes, RM51.2 million will be redeemed by using funds
from the periodic lease payments. Including the
projected reserve account balance of RM11.6 million as at end of year ten, the net amount of notes to be redeemed from the sale of plantation properties is approximately RM32.3 million.

The assets securitised are the plantation properties of BPSB and its subsidiaries. The plantation properties comprise of approximately 8,893.42 acres of plantation estate land, mill and other identified machineries used by the sellers, in the business operations. ABSP will lease the plantation properties to the sellers under a lease agreement of up to 30 years. The lease payments payable by the lessees will be guaranteed by Multi Vest Resources Berhad (Multi Vest), the holding company of BPSB listed on Main Board of Bursa Malaysia Berhad. The lease agreement will be on net lease basis whereby the lessee is responsible for all costs and expenses relating to the properties including costs of repairs and maintenance. Lease rental payments to ABSP are not subjected to set-off, deduction and counterclaim.

As at January 2005, matured palm oil occupied 2,632 hectares or 76.3% of total planted area while the balance comprise immature fields. Trees in their prime (between 8 to 15 years) constituted 31.8% of total plantation while over-aged palms (of over 25 years) are less than 2%. The estate’s FFB yield has been relatively satisfactory ranging from 19.0 mt/ha to 23.0 MT/ha in the last five years and consistently above industry average. The FFB yield of the plantation land is expected to hover between 23.0 MT/ha to 25.0 MT/ha. In addition, the oil extraction rate (OER) has been consistent at 19.0% comparable to industry average.