GEORGE TOWN (July 22): Kinsteel Bhd, which sold 13.29% or 37.2 million units of Perwaja Holdings Bhd’s seven-year 7% redeemable convertible unsecured loan stocks (RCULS) via off-market transactions to non-related parties for RM9.3 million cash two days ago, says it still has 172.8 million units or 61.714% of Perwaja’s total issued RCULS.

In a reply to Bursa Malaysia’s query today on its disposal, Kinsteel said the RCULS were purchased by six persons, with the largest amount at 13.8 million units bought by one 62-year-old Ignatius Luke Jr Tan Keng Hee.

Kinsteel (valuation: 0.3; fundamental: 0) said it was alloted 274.74 million RCULS on March 26, 2012 after it entered into a subscription agreement on July 25, 2011 with Perwaja.

The agreement was inked after the renounceable restricted offer for sale by Kinsteel of RM175.45 million nominal value of RCULS in Perwaja held by Kinsteel to Perwaja shareholders — other than Kinsteel — at 100% of its nominal value on the basis of RM1 nominal value of RCULS for every two ordinary shares of RM1 held in Perwaja as at 5pm on Feb 2, 2012.

“The issue price was at 100% of its nominal value,” it said when asked to state the issue price and the total number of RCULS subscribed by Kinsteel in 2012.

On the basis of arriving at the average carrying amount for RCULS impairment, Kinsteel explained that there are two audited adjustments on June and December last year.

“Impairment in June 2014 to 65 sen per RCULS. The total value after impairment is RM136.5 million. Impairment in December 2014 to 15 sen per RCULS. The total value after impairment is RM31.5 million,” it said.

To recap, Kinsteel announced on Monday (July 20) that it had disposed of 13.29% of Perwaja’s total issued RCULS on July 8, 14 and 16 this year, at 25 sen apiece to raise funds for its working capital.

The disposal had enabled it to realise a gain of RM3.72 million based on the net carrying value of Kinsteel’s investment in Perwaja RCULS as at March 31, 2015 of RM31.5 million.

It had also said then that the average carrying amount of Perwaja RCULS in the books of the Kinsteel group as at March 31, 2015 was about 15 sen per Perwaja RCULS.

Meanwhile, in its filing yesterday, the integrated steel manufacturer also noted its managing director Tan Sri Pheng Yin Huah, who has a direct stake of 1.46% and a 26.7% indirect stake in Kinsteel, holds a 0.55% direct stake and a 31.78% indirect stake in Perwaja.

Meanwhile, Kinsteel chief executive officer Datuk Henry Pheng (1.73% direct and 0.02% indirect stake in Kinsteel), has a 0.01% indirect stake in Perwaja.

Kinsteel closed unchanged at 17 sen today for a market capitalisation of RM178.39 million, while Perwaja, also unchanged at 28 sen, has a market capitalisation of RM156.8 million.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)