Two companies interested in PNG’s success story

Oseah Philemon
Ramu Agri-Industries Limited—producer of Papua New Guinea’s sugar—is under intense pressure from two other major companies trying to take over the company.

One company is understood to be trying to buy out Ramu while the other wants a 50 percent stake in what is arguably a great PNG success story in agriculture.

Ramu Agri-Industries, formerly known as Ramu Sugar Limited, is producing sugar for both domestic and overseas markets in the Ramu Valley of the Madang Province.

Over recent years it has diversified its operations to also include beef production, ethanol fuel, and more recently, oil palm.

Now, the biggest oil palm producer, New Britain Palm Oil Limited (NBPOL), is making a bid to buy out Ramu Agri-Industries for K147 million.

It is offering Ramu shareholders K6.10 per share against another offer from another agro-based company, W R Carpenters.

W R Carpenters is offering K6 per share for 50 percent control of Ramu Agri-Industries Limited’s total issued capital.

On May 16, NBPOL made an initial unsolicited offer of K 5 per share for Ramu shares it does not own.

NBPOL currently has 4,689,283 shares in Ramu—representing 19.45 percent of Ramu’s total issued capital.

W R Carpenters currently holds 4,051,319 shares in Ramu—representing 17.2 percent of Ramu shares.

The board of Ramu has advised shareholders not to take any action yet pending deliberation and decision by the board.

Chairman of Ramu Agri-Industries Limited board, Peter Colton in newspaper advertisements advised shareholders that on June 6, W R Carpenters Limited formally lodged with Ramu its takeover notice.

The Port Moresby Stock Exchange has been advised of the matter.

Colton said the Ramu board has engaged independent experts to do a valuation of the company shares for the offers.

Consequently, the board has asked the shareholders not to take any action on either the NBPOL or W R Carpenters’ offer until the board had considered the report of experts and its recommendations.

In the newspaper advertisements, Colton advised shareholders that after receiving the independent experts’ report, the board will determine and make recommendations to the shareholders on what steps to take next.

Ramu shares were initially listed at K1.23 per share at the time of listing to over K3 per share. Since then, the price has continued to rise and the shares at the end of May were trading at K.4.45 per share.

This, said Colton, represents an increase of 360 percent of the listed price since listing and 48 percent since he last wrote to the shareholders last year.

The board also announced to the Port Moresby Stock Exchange recently that based on professional advice, the board had revalued the company’s land and buildings and the net worth of these assets has increased by K71 million.

“Taking into account the cost of the oil palm development and revaluation, the gross assets of your company now stand at K265 million, compared with last year’s total of K157 million.”

Last year, Ramu produced 6000 tonnes of sugar.

Its oil palm is performing well and the company expects to make its first shipment of 2000 tonnes of palm oil this month.

The price war over Ramu Agri-Industries comes at a time when reports are emerging of the government’s intention to offload its shares in the company.

This move by the government triggered the war between NBPOL and W R Carpenters.

The government owns a 25 percent stake in Ramu and it has not made any official announcement of its intention to offload its stake.

Since news came out about its intention, it has made no denial of the reports.

Prime Minister Sir Michael Somare recently opened the company’s new oil palm mill but made no mention of the intended sale of its shares in Ramu Agri-Industries.

It is not known when an announcement will be made by the government on this issue.