Posted on 08 Dec 2023
Malaysian steel maker Hiap Teck Venture has agreed to subscribe to new shares worth MYR 53.24 million ($11.39m) in its 27.3%-held joint venture Eastern Steel, Kallanish notes.
Hiap Teck says in a bourse filing that the firm has entered into the share subscription agreement to subscribe for 54.60 million new ordinary shares at MYR 0.975 each in Eastern Steel.
The share subscription agreement has been entered with other Eastern Steel joint venture partners including Shanxi Jianlong Industry Company (68.8%), and Chinaco Investment (3.9%).
Shanxi Jianlong and its parent Jianlong Holdings will subscribe 137.6 million news shares in Eastern Steel for MYR 134.16m. Chinco will subscribe 7.8 million new shares in Eastern Steel for MYR 7.61m.
The investment is under the proposed rights issue of Eastern Steel which will amount to a total of 200 million shares worth MYR 195 million. The right issue rationale is to strengthen Eastern Steel’s capital base and the gross proceeds will be utilised for capital expenditure, including the 1,450 mm hot strip mill and working capital requirements.
Hiap Teck's subscription amount will be funded via internally generated funds and/or external borrowings. Barring unforeseen circumstances, the proposed subscription and Eastern Steel’s capacity expansion and venture into the production of hot rolled coil, will significantly expand Eastern Steel’s revenue and earnings and therefore, will contribute positively towards the future performance of the Hiap Teck.
With the successful ignition of the new 1,380 m3 blast furnace on 1 August, Eastern Steel’s production capacity has increased from the previous 700,000 million tonnes/year to 2.7m t/y of steel slabs and billets.
Its production is targeted to be sold locally to satisfy domestic demand and also exported to neighbouring countries principally in Southeast Asia and North Asia, and also Mexico and Turkey.
The firm is in the process of constructing a new 1,450 mm hot rolling mill, which will have rolling capacity of 2.58m t/y of hot rolled coil upon its targeted completion in September 2024.
Source:Kallanish
