Posted on 11 Nov 2024
Singapore-based steel firm Green Esteel (Esteel) could emerge as Malaysian steelmaker Southern Steel's largest shareholder, Kallanish notes.
Southern Steel says in a bourse filing that the company has entered into a conditional subscription agreement with Esteel.
Under the agreement, Esteel will pay MYR 315.86 million ($71.53m) to acquire 752.1 million new shares in Southern Steel at a price of MYR 0.42 per share.
Upon completion of the proposals, Esteel will hold an approximately 50.10% shareholding in Southern Steel, becoming the largest shareholder of the company.
Southern Steel will in turn become a subsidiary of Esteel and an associate company of Hong Leong Manufacturing Group.
Southern Steel also proposes a private placement of up to 152.74 million new shares to third-party investors at an issue price of MYR 0.42 per share. These placement shares represent up to approximately 10.18% of the enlarged issued share capital of the company after completion of the proposed issuance of shares. This will raise proceeds of up to approximately MYR 64.15m.
The company intends to utilise the proceeds of MYR 250m for the upgrading of the company’s steelmaking plant, rolling mill and its downstream plants. It intends to utilise the proceeds of approximately MYR 128.67m to fund working capital requirement. It hopes this will raise the required funding for the group in a cost-effective manner to upgrade its manufacturing and operational capabilities as well as to strengthen its capital base.
Barring any unforeseen circumstances and subject to all required approvals being obtained, the proposals are expected to be completed by the first quarter of 2025.
Source:Kallanish
