KUALA LUMPUR (Sept 15): Melewar Industrial Group Bhd fell after the company proposed to sell its subsidiary to sister company Mycron Steel Bhd. Investors' sentiment was dented by news that the disposal was a related-party transaction and would not bring any material gain to the seller, dealers said.
Melewar announced last Friday that it was to sell wholly-owned subsidiary Melewar Steel Sdn Bhd (MST) to Mycron for RM70 million. To do so, Mycron would issue 104.5 million new shares worth RM46 million or 44 sen per share, and received novation of RM24 million debt owed by Melewar to Mycron currently.
Melewar’s filing with Bursa Malaysia said MST's disposal would not result in any gain or loss to the group. In fact, Melewar said it had invested a total of RM90 million in MST, which was higher than the transacted value.
Today, steel pipe manufacturer Melewar fell 5.5 sen or 11% to its intraday low of 42.5 sen before reducing losses. At 11.47am, Melewar changed hands at 44 sen.
At 11.55am, Mycron fell two sen or 5% to 42 sen.
Both Melewar and Mycron were two of last week’s hot stocks as dealers said there were rumours of a major corporate exercise, and investors bought into it.
Last week, Melewar shares recorded a weekly gain of 39% while Mycron rose 13%.
“However, it proved to be untrue. While there was a sale happening, it was practically just a reshuffling of organisational structure and it would not bring any material gain for Melewar,” said a dealer today.
Both Melewar and Mycron share a common major shareholder in Khyra Legacy Bhd. Khyra owns 36.53% and 54.79% in Melewar and Mycron respectively.