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Sime Darby raises $570 million by privately placing shares

KUALA LUMPUR (NewsRise) - Sime Darby, the world's largest palm oil producer by acreage, said Wednesday it has raised 2.36 billion ringgit ($570 million) in what would be the largest primary share placement in Southeast Asia in almost three years.

Sime Darby's placement of shares attracted orders from institutional investors totaling more than 6.2 billion ringgit, the company said in a statement. The deal, involving 316.4 million new shares, were priced at 7.45 ringgit apiece, a 3.0% discount to the five-day volume weighted average of 7.68 ringgit.

"We are delighted with the strong support from investors for our placement," said chief executive Mohd Bakke Salleh. "This is a major milestone in Sime Darby's deleveraging exercise, which will reduce the debt-to-equity ratio to about 38%."

Sime Darby, which also develops properties, assembles motor vehicles and sells industrial equipment, plans to use half of the proceeds from the share placement to repay bank borrowings. The balance will mostly fund capital expenditure, including replanting of oil palms and expansion of its vehicle showrooms.

The placement would also be the third-largest equity capital market deal in Southeast Asia so far this year, according to data from deal tracker Dealogic. Malaysia Building Society raised $711 million from rights issue in July while Frasers Logistics & Industrial Trust raised $669 million from an initial public offering in Singapore in June.

Sime Darby has earmarked 3.55 billion ringgit ($880.0 million) for capital expenditure this fiscal year that started July 1, up from 2.61 billion ringgit last fiscal year.

The company has been exploring various options, including selling some of its assets and trimming its workforce, to reduce debt and cut costs at a time when its mainstay plantation business faces lower palm oil output.

Sime Darby will sell part of its stake in property developer Eastern & Oriental for 323.3 million ringgit, the company said in September, and is in the process of disposing a property in Singapore and 14 industrial assets in Australia.

Earlier this year, Sime Darby disposed subsidiaries in Singapore and land in Malaysia that yielded over 540 million ringgit. Sime Darby has also planned job cuts that will affect about 3% of its 7,400 employees in the industrial division by June-end.

Shares of Sime Darby rose 2.6% to 7.81 ringgit on Wednesday while the benchmark FTSE Bursa Malaysia KLCI was 0.1% higher.

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