S&P: IOI unaffected

Standard & Poor's said that IOI Corp. Bhd.'s (BBB+/stable) recent announcement on the joint-venture acquisitions of oil palm plantations in Kalimantan, Indonesia, for $130 million, in itself, has no immediate impact on the ratings on IOI or the outlook.

Although IOI is still finalizing the capital expenditure related to these plantations, the agency said it does not expect this to materially increase the financial commitments of the company.

These acquisitions are expected to improve diversity in the company's resource base and reduce its dependence on its Malaysia operations, the agency added.

Nonetheless, S&P said it considers that despite the significantly higher crude palm oil prices and the company's improved cash flow, the recent acquisitions and the shareholder-friendly measures such as the Malaysian ringgit 1.4 billion share buy-back are likely to somewhat weaken the company's credit protection ratios.

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