PETALING JAYA: Lion Industries Corp Bhd (LICB) has proposed to sell its entire 100% stake in Antara Steel Mills Sdn Bhd to Singapore-based Esteel Enterprise Pte Ltd for US$122mil (RM510mil).
The proceeds of the stake sale of Antara, which is held through its 99%-owned subsidiary Amsteel Mills Sdn Bhd (AMSB), will go towards a proposed expansion into the flat steel business.
LICB is selling the hot-briquetted iron plant which is currently being operated by Antara in Labuan at a price-to-book value of 4.81 times and a price to earnings ratio of approximately 9.03 times, it said in a statement.
“LICB is expected to realise a gain of RM403.10mil upon the completion of this proposed disposal,” the company said.
“The original cost of investment for the sale shares by AMSB of RM138.23mil was made in 2002. The hot-briquetted iron plant was acquired by Antara from AMSB in 2005 at the original cost of investment of approximately RM300mil,” it added.
The disposal would also allow it to unlock the value of Antara and realise this substantial gain that will enhance and consolidate LICB’s financial position, the company said.
The buyer also agreed to acquire the extra assets and assume the liabilities based on Antara’s management account as at Sept 30, 2021.
This will see the disposal consideration being adjusted to US$158.82mil (RM663.85mil) eventually, the announcement said.
The company noted that the disposal will translate into an increase in earnings per share of approximately 59.21 sen for the LICB Group for the financial year ending Dec 31, 2021.
“On a proforma basis, it is also expected to increase the net assets per share of LICB by approximately 51 sen and is also expected to reduce the gearing of the LICB Group from 0.13 times to 0.10 times based on the audited consolidated statement of its financial position as at June 30, 2020,” it said.
Barring any unforeseen circumstances and subject to the fulfilment of all the conditions precedent, LICB said it expects the disposal to be completed by mid-February 2022.
Esteel’s directors are You Zhen Hua and Jiang Hai Rong and it is a wholly owned unit of Advance Venture Investments Ltd.
Esteel is mainly involved in prefabricated steel reinforcement steel products for use in concrete, trading of rebars and the manufacturing and sale of wire mesh fences.
The disposal is subject to the approval of the Ministry of International Trade and Industry and LICB’s shareholders.
“The proceeds from this proposed disposal will be placed in deposits with financial institutions and/or short term money market instruments in the event proceeds are not immediately utilised,” it said.