Kossan buys vacant industrial land in Banting from William Cheng

KUALA LUMPUR (Aug 30): Glove maker Kossan Rubber Industries Bhd has proposed to buy a piece of vacant industrial land in Banting, Selangor, from a company controlled by steel magnate Tan Sri William Cheng for RM95.99 million, or at RM22.50 per sq ft.

Kossan’s wholly-owned unit Ideal Quality Sdn Bhd signed a Sale and Purchase agreement (SPA) with property development firm Andalas Development Sdn Bhd for the purchase of the freehold industrial land, measuring 4.27 million sq ft.

Andalas Development is a wholly-owned subsidiary of The Brooklands Selangor Rubber Company Ltd, which is ultimately owned by Amble Bond Sdn Bhd. A check with the Companies Commission of Malaysia revealed that steel tycoon Cheng, the controlling shareholder of the Lion Group, owns a 58% stake in Amble Bond.

According to Kossan, the vacant industrial land is located within the vicinity of the Megasteel Steel Complex in Banting, which had in September 2016 closed down its operations after 17 years in operation as it grappled with volatile commodity prices and stiff competition from Chinese steelmakers.

“The land is proposed to be developed for the group’s manufacturing activities,” Kossan said in a filing with Bursa Malaysia today.

As for the valuation of the land, the glove maker said, there is no valuation carried out by Kossan or Ideal Quality on the land.”

However, as at end-June, Kossan said the land has a net book value of RM5.8 million.

As for the price of the land, Kossan said it included an obligation to undertake an earth filling work, which will require it to fill and elevate the land to the level approved by the Drainage and Irrigation Department, according to the announcement. Kossan added that it has nine months from today to complete the earth-filling work.

As for the justification to acquire the land, Kossan said it will create greater economic value and increase the earnings potential for the company over the medium and longer term.

“Its strategic location, surrounded by mature amenities and facilities as well as the rapid development experienced by its surrounding areas due to population growth and ongoing new commercial and residential development, are expected to provide the manpower needed in the medium and longer term,” Kossan added.

After careful deliberation, Kossan said its board of directors is of the opinion that the terms stipulated within the SPA to buy the vacant industrial land are fair, reasonable, and is in its best interest.

Listed since 1996, shares in Kossan — the third largest glover maker by capacity after Top Glove Corp Bhd and Hartalega Holdings Bhd — gained 21 sen to close at RM7.20 today, for a market capitalisation of RM4.6 billion. — theedgemarkets.com

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