KUALA LUMPUR – Lion Industries Corp Bhd will be selling its stake in a Labuan-based steel mill for US$158.82 million (about RM663.85 million) under an all-cash deal.
In a bourse filing today, the group said its majority-owned subsidiary Amsteel Mill Sdn Bhd is selling its entire stake in Antara Steel Mills Sdn Bhd to Esteel Enterprise Pte Ltd. Antara operates a Labuan-based hot briquette iron (HBI) plant which produces HBI mainly for the export market.
Lion Industries said the sale will enable it to unlock Antara Steel’s value for a disposal gain of around RM403.1 million and finance Lion industries’ planned expansion into the flat steel business.
“The original cost of investment for the sale of shares by Amsteel Mills of RM138.23 million was made in 2002. The HBI plant was acquired by Antara from Amsteel Mills in 2005 at the original cost of investment of approximately RM300.00 million.
“Upon completion of the proposed disposal, the Lion Industries Group is expected to realise a gain of RM403.10 million,” Lion Industries said.
The buyer, Singapore-based Esteel, was incorporated on August 18, 2017. It’s an investment holding company with subsidiaries manufacturing a wide range of steel products. The company is also involved in the merchandising and fabrication of reinforcement steel products for the construction and building industry.
Barring any unforeseen circumstances and subject to the fulfilment of all conditions, Lion Industries said the proposed disposal is expected to be completed by mid-February 2022.
It added that on the assumption that the proposed disposal is completed by the end of this year, the sale is expected to result in an estimated gain of RM403.1 million for Lion Industries for the financial year ending December 31, 2021. This will translate into an increase of about 59.21 sen in Lion Industries’ earnings per share.
Yesterday, Amsteel Mills and Esteel entered into the conditional sale and purchase agreement for the proposed disposal of the 100% stake in Antara Steel for approximately US$158.82 million (about RM663.85 million) which take into account Antara Steel shares and the Labuan plant’s assets and liabilities.
Lion Industries said Amsteel Mills is selling its entire holding of 218.01 million ordinary shares and 30 million redeemable preference shares in Antara Steel to Esteel for US$122 million (RM509.96 million), and that Esteel "agreed to pay the additional consideration to the seller for the acquisition of the extra assets (being the Labuan inventory, the Labuan current assets and the Labuan account receivables) and assumption of the liabilities”.
Earlier today, Lion Industries’ share trade was halted between 9:01am and 10:01am in conjunction with the disposal announcement.
When trading resumed, Lion Industries’ stock price climbed eight sen or 13.11% at 11:57am to 69 sen, giving the steel manufacturer a market value of about RM469.75 million. – The Vibes, October 12, 2021
