KUALA LUMPUR (Jan 9): Steel maker Prestar Resources Bhd, which is planning to list its 51%-owned manufacturing and trading subsidiary Tashin Steel Sdn Bhd (TSSB) on the ACE Market, will do so via a special purpose vehicle, Tashin Holdings Bhd, by the fourth quarter of this year.
Penang-based TSSB is principally involved in the processing of steel coils into slit coils and steel sheets, as well as the manufacturing of steel products like expanded metals products, flat bars, square bars, steel pipes, steel plates, checkered plates and C Purlins.
As part of the proposed listing, Prestar and Formula Naga Sdn Bhd — which owns the remainder 49% stake in TSSB — will transfer their stakes in TSSB to Tashin Holdings via a share sale agreement inked today, for RM144.07 million, Prestar said in a statement.
The share sale will be satisfied by Tashin Holdings issuing 288.14 million new shares at an issue price of 50 sen per share to Prestar and Formula Naga. This will result in Prestar holding 51% in Tashin Holdings, and Formula Naga the other 49%.
Subsequently, Tashin Holdings will go for an initial public offering (IPO) that will involve the issuance of 59.02 million new shares, which is equivalent to 17% of its enlarged share capital, at an issue price to be determined.
Of the 59.02 million shares, 17.36 million new shares will be made available to the public, 8.68 million to eligible directors, employees and business associates, 17.36 million to entitled Prestar shareholders, while the remaining 15.62 million will be reserved for private placement to selected Bumiputra investors.
The IPO will also include an offer for sale by Prestar and Formula Naga of 55.2 million Tashin Holdings shares, or 15.9% of Tashin Holdings's enlarged share capital.
Prestar group managing director Datuk Toh Yew Peng said the proposed listing of TSSB will enable Prestar to unlock and crystallise the value of its investment in TSSB and enhance shareholders' value at the Prestar level.
"The exercise will provide a transparent valuation benchmark for the business of TSSB [and] at the same time enable Prestar to reduce its existing borrowings," he said.
Prestar said the proceeds from the IPO will be mainly used for capital expenditure to support Tashin Group's business expansion into the production of wire mesh products and to upgrade its existing steel processing line.
It will also be used to buy a piece of industrial land for the construction of a new factory and to supplement the working capital of Tashin Group which includes the purchase of raw materials and to be used to defray listing expenses for the IPO.
M&A Securities Sdn Bhd is the principal adviser of the IPO.
After the IPO, Prestar said it will continue to focus on its downstream manufacturing of material handling equipment, like racking for warehouses and third party logistic in e-commerce, wheelbarrows for palm oil plantation, and guardrails for highway.
"It will also expand its manufacturing capacity of carbon steel pipes and hollow sections for supplies to furniture, office equipment manufacturing, engineering and fabrication usage etcetera," the statement read.
Prestar shares closed four sen or 3.48% lower at RM1.11, giving it a market capitalisation of RM219.43 million.