Dentons HPRP, a leading law firm, proudly shares its pivotal role in providing legal assistance for the formation of PalmCo and SupportingCo, the new sub-holdings under Nusantara Plantation Holding PTPN III (State-Owned). Led by Maurice Maulana Situmorang and Winda Tania, Dentons HPRP's expert team, including Senior Associate Lawyers Rio Febrianus Pasaribu, Ken Atyk Nastiti, Dinda Triwijanarko, and Associate Lawyers Rafi Andiandra Wardhana, Fremi Rovi Raturandang, Ronny Chrismanto Ginting, and Carlos William Rettobjaan played a crucial role in navigating this landmark transaction.

Dentons HPRP played an integral role in the complex transaction involving PalmCo and SupportingCo, pivotal entities formed through the merging of three PTPN III (Persero) subsidiaries, PTPN IV, PTPN V, PTPN VI, and PTPN XIII, and followed by accepting spin-off of PTPN III (Persero)’s palm and rubber plantation for PalmCo, and merging the rest of PTPN III (Persero) subsidiaries, which are PTPN I, PTPN II, PTPN VII, PTPN VIII, PTPN IX, PTPN X, PTPN XI, PTPN XII, and PTPN XIV, for SupportingCo.

This monumental restructuring was conceptualized even before the establishment of PalmCo and SupportingCo, part of PTPN group's strategic reorganization. Collaborating alongside McKinsey and Mandiri Sekuritas, Dentons HPRP meticulously crafted multiple transaction options to align with McKinsey's recommendations, categorizing sub-holdings based on commodity types for an optimal group structure.

Following the decision of what kind of structure that will be used by PTPN group, our efforts faced hurdles in tax matters during the spin-off phase, with substantial tax implications for PTPN III (Persero). To mitigate this, Dentons HPRP, in conjunction with Mandiri Sekuritas and PTPN's tax consultant, KPMG, strategically positioned the restructuring as an integral part of Indonesia's National Strategic Program (Program Strategis Nasional – PSN), necessitating presidential endorsement. This endeavor involved close collaboration with various ministries under the guidance of the Minister Coordinator for Economic Affairs of the Republic of Indonesia.

Furthermore, as the merger and spin-off transaction will require, under Indonesian Law, each entity to obtain approval from their creditors, Dentons HPRP assisted the PTPN Group in navigating debt restructuring requirements, resulting in the reconfiguration of debt documentation totaling up to IDR 31,000,000,000,000, approximately equivalent to two billion United States Dollars. This comprehensive effort showcases Dentons HPRP's commitment to facilitating and overseeing multifaceted transactions essential for achieving strategic corporate objectives.

Announced on December 1, 2023, the formation of PalmCo and SupportingCo marks a major milestone in the global palm oil industry. As mentioned earlier above, the establishment of PalmCo and SupportingCo is an implementation of the National Strategic Program, aimed at achieving self-sufficiency, particularly in the areas of food security and energy.

The integration of the PTPN Group is also a demonstration of the company's commitment to strengthening economic resilience for quality and equitable growth through downstreaming in the agricultural sector, regional development to reduce disparities, and ensuring equitable distribution through the People's Oil Palm Replanting Program. Moreover, it involves environmental stewardship, enhancing disaster resilience, and addressing climate change through accelerating the development of renewable energy.

PalmCo is expected to become the world's largest palm oil company in terms of land area, reaching over 600,000 hectares by 2026, positioning itself as a key player in the global palm oil industry. As a result, PTPN is entrusted with contributing to the increase in national CPO (Crude Palm Oil) and domestic cooking oil production. PTPN estimates that its cooking oil production will rise from 460,000 tons per year in 2021 to 1.8 million tons per year (a fourfold increase) by 2026.

Meanwhile, SupportingCo will serve as a Premier Plantation Asset Management Company, encompassing activities involving the utilization of plantation assets through optimization and asset divestment, plantation crop management, diversification into other businesses, and engaging in green initiatives that add value to the company.

Congratulations to Nusantara Plantation Holding PTPN III for the successful corporate action.

Dentons HPRP has been providing strategic advisory and comprehensive legal assistance to corporations in their business in Indonesia. For more details on our services, please contact the partners listed under the key contact.

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