This article first appeared in The Edge Financial Daily on January 8, 2019

KUALA LUMPUR: Lion Industries Corp Bhd is divesting its entire 50% stake in Singapore-based Angkasa Amsteel Pte Ltd (AAPL) to a South Korean steel manufacturer for S$26.65 million, equivalent to RM80.90 million, to raise funds for its flat steel business venture.

In a filing with Bursa Malaysia yesterday, Lion Industries said it had signed a conditional agreement with Daehan Steel Co Ltd for the proposed disposal, which is expected to be completed by the first quarter of this year if its shareholders approve the deal.

AAPL is involved in the business of steel trading and fabrication, and the trading of other building materials. Lion Industries purchased the 50% stake in AAPL in 2011 and 2012 for RM38.05 million in total. The remaining 50% is held by LTC Corp Ltd.

The group said the proposed disposal, which allows it to dispose of its non-core assets, is not expected to result in any gain or loss for the group.

The proceeds from the disposal will be used for its expansion into the flat steel business, which will require about RM636 million.

The investment involves funding for the proposed acquisition of flat steel assets with a production capacity of up to 3.2 million tonnes per annum of hot rolled coils and up to 700,000 tonnes per annum of cold rolled coils.

 Prior to the disposal, AAPL will transfer its stakes in its Malaysian units to Lion Industries and LTC, proportionate to their shareholdings, by way of a distribution of dividends in specie.

These units will be liquidated after AAPL’s sale, from which Lion Industries expects to get another S$10.16 million (about RM30.84 million). Total proceeds from the proposed disposal and the restructuring exercise would be S$36.81 million (about RM111.74 million), the group added.

Lion Industries shares finished 3.5 sen or 6.7% up at 56 sen yesterday, giving it a market capitalisation of RM381.26 million.