KUALA LUMPUR:FGV Holdings has said that the firm has no problem in terminating the Land Lease Agreement (LLA) with Felda.

However, the firm said Felda has not been in touch to negotiate on the matter.

"Under the terms of the agreement, the cancellation of the LLA is allowed. If Felda issues a notice on this matter, FGV will proceed with the procedure as stipulated in the LLA," FGV said in a statement on Tuesday.

FGV said the assets involved in the LLA were farms and did not involve FGV's palm oil processing plant.

"Therefore, if Felda wants to buy FGV palm oil processing plant, it must be based on the principle of readiness of two parties and according to the current market value.

"It also requires the consent of other shareholders through the Extraordinary General Meeting (EGM)," FGV added.

In an interview with the local media on October 18, Felda Chairman, Datuk Seri Idris Jusoh informed that Felda intends to take back a total of 350,000 hectares of land leased to FGV to strengthen the company's financial position.

Idris stressed that the move is part of Felda's transformation plan to create a competitive and sustainable business model.

In the interview, Idris also stated that Felda plantation operating income has fallen since FGV was listed on Bursa Malaysia in 2012.

In this regard, FGV in the same statement explained, the financial weakness is due to the decline in palm oil (CPO) prices as well as the replanting process.

"After FGV is listed, the payment to Felda did not meet the set projection due to the CPO price drop.

"The yield of fresh palm bunches (FFB) is much lower than expected as 50 per cent of the trees are old (over 21 years old).

"In addition, 15,000 hectares of land a year is allocated for the replanting process, thus further reducing income.

"Replanting expenses also reach RM300 million a year apart from fertiliser and rehabilitation costs worth RM300 million a year," said FGV.

FGV also asserted that Felda received RM5.7 billion from the entity's listing in 2012.

"FGV cannot comment on how Felda is using the proceeds of this IPO. However, for FGV, the results of this listing have not been well invested.

"Until the end of 2018, FGV experienced a significant decline of RM780 million from new investments," said FGV

FGV also denied the statement that Felda should receive RM800 million a year under the LLA.

"In the agreement, it is explained that the amount payable to Felda reaches RM248 million a year plus 15 per cent operating profit from LLA land.

"So far, FGV has fulfilled its responsibility to provide RM248 million a year according to the LLA. FGV has paid more than RM2.5 billion to Felda from 2012 to 2019," the firm added.