by AFIQ AZIZ / pic by MUHD AMIN NAHARUL
LION Industries Corp Bhd plans to take over a China-based property company in a RM210.35 million debt settlement with Lion Diversified Holdings Bhd, which is in liquidation.
In an exchange filing yesterday, Lion Industries said Lion Diversified owes RM26.79 million to Antara Steel Mills Sdn Bhd and RM35.17 million to Lion Waterway Logistics Sdn Bhd, both of which are the subsidiaries of Lion Industries.
Lion Diversified also owes RM148.39 million to Posim Marketing Sdn Bhd, which is a 74% indirect subsidiary of Lion Industries.
Lion Industries said the amount would be settled via a transfer of one ordinary share in the property company, Well Morning Ltd, at HK$1 (52 sen) — which represents a 100% equity in Well Morning held by Lion Diversified — to Lion Industries’ subsidiaries on an “as is where is” basis.
Well Morning is a private limited liability company domiciled and incorporated in Hong Kong, and is a wholly-owned subsidiary of Lion Diversified.
The principal activity of Well Morning is investment holding. Its only investment is in its wholly-owned subsidiary, Changshu Lion Enterprise Co Ltd — a company incorporated in China.
Changshu Lion is principally involved in property development in Changshu, China.
Lion Diversified was ordered by Malaysia’s High Court on Oct 15, 2019, to be wound up under the provisions of the Companies Act 2016, according to Lion Industries.
“In view that Lion Diversified is currently in liquidation process, the liquidator of Lion Diversified is, therefore, not in a position to repay the outstanding secured amount to each of the secured parties. As such, the proposed settlement would enable the secured parties to recover the outstanding secured amount that has been long out-standing,” the group said.
The proposed settlement is expected to result in an increase in earnings amounting to RM162 million or approximately 24 sen per share for the Lion Industries group for the financial year ending June 30, 2021.
The settlement amount of RM210.35 million was arrived at after having considered Well Morning’s market valuation of RM235.44 million.
The amount also considered the waiver and/or release of the sum of RM47.68 million due to Lion Diversified from Well Morning, and novation amounting to RM88.76 million due to Changshu Lion from Lion Diversified.
On Tuesday, Lion Industries announced that it would invest RM3 billion in a blast furnace facility to restart its hot-rolled coil (HRC) project in the second quarter of 2021 (2Q21).
The company expects to produce between 2.5 million and three million tonnes of HRC a year by 2Q21, with an initial investment of RM3 billion. HRC is a flat steel product used to make motor vehicles and electrical appliances, among others.
The company said the investment will be used to develop a 3,000 cu m blast furnace facility, sinter plant, coke oven and two converters, and for its existing three arc furnaces, ladle furnace and caster.
Lion Industries’ share price ended 4.5 sen or 10.47% higher yesterday at 48 sen, valuing the company at RM341.01 million.