KUALA LUMPUR (May 18): Bright Steel Service Centre Sdn Bhd (BSSC), a wholly-owned subsidiary of Bright Steel Sdn Bhd (BSSB), which, in turn, is a wholly-owned subsidiary of Lion Corporation Bhd, has entered into a conditional sale and purchase agreement and business assets acquisition agreement with Axis Development Sdn Bhd for the disposal of property and assets for a total cash consideration of RM64 million.

The property is a piece of leasehold land measuring 453,500 square feet located in Shah Alam, Selangor, together with a one-storey factory building with a two-storey annexed office building, a one-storey factory building with an office and ancillary buildings erected thereon. These will be sold for RM61 million while assets in the form of cranes and shearing or slitting machines will be sold for RM3 million.

According to the filing to Bursa Malaysia today, the consideration for the property was arrived at on a willing-buyer willing-seller basis after taking into consideration the RM61.2 million valuation appraised by PPC International Sdn Bhd and the audited net book value of the property as at June 30, 2015 of approximately RM17.69 million.

The assets consideration was arrived at on a willing buyer-willing seller basis after taking into consideration the audited net book value of the assets as at June 30, 2015 of approximately RM110,000, representing a premium of RM2.89 million.

Lion Corp is expected to record a net gain of approximately RM44 million after tax and expenses arising from the proposed disposal based on the audited net book value as at June 30, 2015.

The proceeds from the proposed disposals are to be used for repayment to BSSC's lenders (RM1 million), taxation (RM1.5 million), defraying expenses in relation to proposed disposals (RM1 million), repayment of outstanding balance arising from purchase of BSSB (RM15 million) and working capital for the Lion Corp Group (RM45.25 million).

"Bright Steel Sdn Bhd has been suffering losses for the past several years and it is not expected that the operation will turn (itself) around in the near future," it said.

The proposed disposal is an opportunity for Lion Corp to dispose of its non-performing assets according to the announcement.