* Earlier Felda plan to buy $680 mln stake was heavily criticised
* Felda to now use unlisted unit to acquire the stake -sources
* Felda now seeking to cut price by as much as 30 pct -sources
By Eveline Danubrata and Emily Chow
JAKARTA/KUALA LUMPUR, Feb 12 (Reuters) - Malaysian state-owned conglomerate Felda will use an unlisted unit to buy into Indonesian tycoon Peter Sondakh's debt-burdened Rajawali Group, sources familiar with the matter said, seeking to avoid heavy investor criticism that scuttled an attempted deal last year.
Plans for Felda to buy 37 percent of palm oil plantation firm PT Eagle High Plantations Tbk collapsed last year after politicians and investors blasted a $680 million deal as an expensive favour for Sondakh, who has long-standing ties with Malaysian Prime Minister Najib Razak.
Both Najib and Sondakh have said that the deal was commercially driven.
This time, instead of using its main listed entity, Felda Global Ventures Holdings Bhd, the world's third-largest palm plantation operator, Felda will use an unlisted unit to acquire the stake. It is also seeking to cut the price by as much as 30 percent, the sources said.
The sources declined to be identified as they were not authorised to talk about the matter.
"The deal is still very much alive with (a) good discount," said one person close to the Malaysian government.
Getting a deal done will help ease debt woes for Sondakh, who like other tycoons in the country has been hit hard by the commodities rout and a slide in the rupiah.
Sondakh and Eagle High declined to comment.
Rajawali Group said the transaction with Felda was "being finalized" but declined to give details or comment on the group's debt levels.
Felda Global Ventures declined to comment. Felda Group and unlisted unit Felda Investment Corporation - which the sources said was likely to be the one acquiring the stake - did not respond to requests for comment.
Najib's office also did not respond to requests for comment.
Under the rejigged terms, Felda Group could rework the offer to include debt that would be exchangeable into shares in another company controlled by Sondakh, the sources said.
Several sources said they expected the deal would close next month, though one said the situation was "still fluid".
Felda and Rajawali have touted the commercial logic of marrying Felda's palm oil processing capabilities with Eagle High's plantations, with Felda arguing that it was difficult for it to acquire more landbank in Malaysia.
But the original deal proposal proved too expensive for investor comfort levels.
The proposed acquisition implied a price of 775 rupiah per share or 63 times estimated net profit for 2015, significantly above Eagle High's rivals, said CIMB Research analyst Ivy Ng. Its rivals trade at between 14 and 55 times earnings, according to Thomson Reuters data.
Sondakh's Rajawali Group, which can trace its roots to a modest coconut oil and timber business, has become a sprawling empire spanning mining to property and he is known for his strong political connections.
One of his first partners was Bambang Trihatmodjo, a son of Indonesia's former president Suharto. Together, they built the Grand Hyatt hotel in Jakarta and Indonesia's first privately owned television network, Rajawali Citra Televisi Indonesia.
But last year, Sondakh's worth fell by around $400 million from a year earlier to $1.9 billion, pushing him out of rankings of Indonesia's top 10 richest, according to Forbes business magazine.
In addition to Eagle High, he has been trying to sell stakes in PT Nusantara Infrastructure Tbk, taxi operator PT Express Transindo Utama Tbk and gold miner Archi Indonesia. (Reporting by Eveline Danubrata and Emily Chow; Additional reporting by Saeed Azhar in SINGAPORE, John Chalmers and Cindy Silviana in JAKARTA; Editing by Clara Ferreira Marques and Edwina Gibbs)