KUALA LUMPUR (Oct 12): Lion Industries Corp Bhd’s 99%-owned subsidiary Amsteel Mills Sdn Bhd is selling the latter’s 100% stake in Antara Steel Mills Sdn Bhd to Esteel Enterprise Pte Ltd for approximately US$158.82 million (about RM663.85 million) under an all-cash deal that will enable Lion Industries to unlock the value of Antara Steel for a disposal gain of around RM403.1 million and finance Lion Industries’ planned expansion into the flat steel business.

In an announcement to Bursa Malaysia on Tuesday, Lion Industries said Antara Steel operates a Labuan-based hot briquetted iron (HBI) plant which produces HBI mainly for the export market.

"Esteel was incorporated in Singapore on Aug 18, 2017. The principal activity of Esteel is investment holding and its subsidiaries namely BRC Asia Ltd is involved in prefabricated steel reinforcement steel products for use in concrete, trading of rebars and manufacturing and sale of wire mesh fences, and Lee Metal Group Ltd is involved in steel merchandising and fabrication of reinforcement steel products for the construction and building industry.

"The original cost of investment for the sale shares by Amsteel Mills of RM138.23 million was made in 2002. The HBI plant was acquired by Antara from Amsteel Mills in 2005 at the original cost of investment of approximately RM300.00 million.

"Upon completion of the proposed disposal, the Lion Industries Group is expected to realise a gain of RM403.10 million,” Lion Industries said.

Barring any unforeseen circumstances and subject to the fulfilment of all the conditions precedent, the proposed disposal is expected to be completed by mid-February 2022, according to Lion Industries. 

Lion Industries said that on the assumption that the proposed disposal is completed by Dec 31, 2021, the sale is expected to result in an estimated gain of RM403.1 million for Lion Industries for the financial year ending Dec 31, 2021, and that the estimated gain of RM403.1 million will translate into an increase of approximately 59.21 sen in Lion Industries’ earnings per share.

According to Lion Industries, Amsteel Mills and Esteel had on Monday entered into the conditional sale and purchase agreement for the proposed disposal of the 100% stake in Antara Steel for approximately US$158.82 million (about RM663.85 million) which take into account Antara Steel shares and the Labuan plant’s assets and liabilities. 

Lion Industries said Amsteel Mills is selling its entire holding of 218.01 million ordinary shares and 30 million redeemable preference shares in Antara Steel to Esteel for US$122 million (RM509.96 million), and that Esteel "agreed to pay the additional consideration to the seller for the acquisition of the extra assets (being the Labuan inventory, the Labuan current assets and the Labuan account receivables) and assumption of the liabilities”.

At Bursa on Tuesday, Lion Industries’ share trade was halted between 9:01am and 10:01am in conjunction with the Antara Steel disposal announcement.

When Lion Industries’ share trade resumed, the stock’s price rose eight sen or 13.11% at 11:57am to 69 sen for a market value of about RM469.75 million based on the company’s 680.8 million issued shares.

Lion Industries shares were transacted between 61.5 sen and 71.5 sen so far on Tuesday.