Lion Industries sells Klang asset for RM45 mil to pare debts

KUALA LUMPUR (April 13): Lion Industries Corp Bhd is selling an industrial property in Kapar, Klang, to Yinson Corp Sdn Bhd for RM45 million to partly settle some outstanding debts owed by its 99%-owned Amsteel Mills Sdn Bhd (AMSB), after which it will lease back the asset from Yinson Corp.

In a filing with Bursa Malaysia yesterday, Lion Industries said its wholly-owned subsidiary Lion Metal Industries Sdn Bhd (LMI) yesterday entered into a sale and purchase agreement (SPA) with Yinson Corp for the disposal. Yinson Corp is now wholly-owned by Liannex Asia Pacific Sdn Bhd.

The industrial premises, which sits on a 3.23ha plot, comprises a three-storey office building with an annexed single-storey factory, two blocks of single-storey factories and a guardhouse.

AMSB also inked an agreement with Yinson Corp for a five-year lease of the property. The agreement permits the renewal of the lease for another five years, along with an option to purchase the property during the period. Proceeds from the sale shall be used to partly offset some RM83 million outstanding debts owed by AMSB to Yinson Corp, which supplied steel scrap metals to AMSB. LMI acquired the property for RM13.7 million in 1983.

“The proposed leaseback will ensure ongoing business operations of AMSB are not disrupted, and its operations will continue at the property as usual,” it added.

The proposed sale and leaseback are not expected to give rise to any gain or loss for the Lion Industries group, as the transaction is a finance lease, it added. However, the exercises are expected to increase its gearing from 0.04 times to 0.07 times.

“Barring any unforeseen circumstances and subject to the fulfilment of all the conditions precedent, the proposed sale is expected to be completed by the third quarter of 2017, pursuant to the terms of the SPA. The proposed leaseback will commence upon completion [of the sale],” it said.

This article first appeared in The Edge Financial Daily, on April 13, 2017.

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