Lion Diversified distributes Lion Corp shares to stem loss

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KUALA LUMPUR (May 8): Lion Diversified Holdings Bhd (LDHB) proposed to distribute 200 million Lion Corp Bhd shares or 15.1% stake to its shareholders, in order to “strengthen its financial position”.

In a filing with Bursa Malaysia today, LDHB (fundamental: 0.2; valuation: 0.9) said the distribution would be done by way of dividend-in-specie, on the basis of one-for-seven.

LDHB owns 49.1% stake in loss-making Lion Corp (fundamental: 0.2; valuation: 0.9) as at April 30.

In the announcement, Lion Diversified said despite its ownership in Lion Corp being lower than 50%, it has to consolidate both entities' account at group level because of the de-factor control it possesses on the latter.

“Following the completion of the proposed dividend-in-specie resulting in the dilution, Lion Diversified would not be required to consolidate the Lion Corp’s losses into LDHB’s financial results,” it said. “Hence, the financial position of the Lion Diversified will be strengthened,” it added.

Lion Corp has been in the red since financial year ended June 30, 2009 (FY09). As at FY14, the flat steel product manufacturer posted an accumulated loss of RM516.63 million.

The group anticipated the corporate exercise to be completed by end of June.

Tycoon Tan Sri William Cheng Heng Jem owns a 49.08% stake in LDHB.

LDHB’s share price remained unchanged at 12 sen apiece today, with a market capitalisation of RM167.06 million; while Lion Corp fell 0.5 sen or 7.69% to six sen, with market capitalisation of RM79 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.)