Monday, November 15, 2010


Olam Intl (OLAM): signs 2 key deals with Gabon govt in Africa - a USD1.3bn fertiliser plant project, and a USD236m for palm plantations. Co will have an 80% stake in the fertiliser plant, with Gabon govt 20%. The JV will enjoy a 10-yr tax holiday after targeted commencement of ops 1H 2014, and 10% tax rate after. Project will be exempted from customs duty and VAT as long as ops cont. Grp expects venture's EBITDA to eventually range between USD300-350m and a ROE of >45%...

Grp will take a 70% stake in the plantations with Gabon govt 30%. Plans to develop an initial 50k ha, or 1/6 of the 300k ha landbank the govt has committed to the jv. To enjoy a 16-yr tax holiday from FY11, exemption from VAT and customs duties on imported machinery and inputs, oil-and-gas and fertilisers. Planting is expected to start in early 2012 with completion scheduled for 2016…

Earnings impact will only filter in after 2014 but incentives make projects attractive. LT positive for Olam.

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