Bursa quizzes Lion Industries over RM92 mil land disposal

• Bursa Securities in a query asked Lion Industries five questions, including the reason for the estimated expenses for the disposal at RM22.23 million (24% of the proceeds), and how Lion Industries arrived at the disposal consideration of the two parcels of land, measuring 26.787 acres in Kawasan Perindustrian Olak Lempit, Banting.
• It also asked for the estimated breakdown of the proceeds for payment to creditors, administrative and operating expenses, which Lion Industries said “cannot be determined at this juncture”.

KUALA LUMPUR (Sept 5): Lion Industries Corp Bhd’s proposed RM92.03 million land disposal announced on Sunday has raised questions from Bursa Securities.

Bursa Securities in a query asked Lion Industries five questions, including the reason for the estimated expenses for the disposal at RM22.23 million (24% of the proceeds), and how Lion Industries arrived at the disposal consideration of the two parcels of land, measuring 26.787 acres in Kawasan Perindustrian Olak Lempit, Banting.

It also asked for the estimated breakdown of the proceeds for payment to creditors, administrative and operating expenses, which Lion Industries said “cannot be determined at this juncture”.

In its reply, Lion Industries said no independent adviser had been appointed in pursuant to the proposed disposals.

"The basis for the disposal consideration of RM92.03 million has also taken into consideration the holding cost for these two pieces of land, which were acquired in 2005 and 2021 respectively," it said in its filing.

In regards to the RM22.23 million expenses arising from the disposal, Lion Industries said the estimated expenses comprise professional fees, fees payable in relation to the subdivision of the lands, real property gains tax and estimated advances charges.

It had earlier said the original costs of the lands were RM12.73 million. As a result, sale of the two lands would land Lion Industries a pro forma net gain of RM57.10 million, it added.

To recap, Lion Industries had signed two conditional share and purchase agreements with Unichamp Mineral Sdn Bhd, which is engaged in the trading of lime-based products, on Sept 1, according to its filing on Sunday.

Lion Industries, via its 99%-owned unit Amsteel Mills Sdn Bhd, is selling 19.781 acres of land to Unichamp Mineral for RM67.96 million (sale of land one), while its wholly owned unit Gelora Berkat Sdn Bhd is disposing of 7.006 acres of land for RM24.07 million (sale of land two).

The deal required Unichamp Mineral to pay an advance of US$10 million (RM46.47 million) for the sale of land one and the purchaser is entitled to charge 0.8% per month.

“As the proposed disposal of sale of land one is envisaged to take up to 30 months from the date of the SPA [sale and purchase agreement] one for the parties to fulfil the conditions precedent as set out in the SPA one, the purchaser has agreed to the advances.

“The advances would enhance the liquidity of the group to fund its working capital as compared to a typical transaction of receiving funds upon completion of the transaction,” said Lion Industries in its reply to Bursa’s query.

It plans to utilise the proceeds of RM69.80 million for payment of the group’s creditors, defray its day-to-day administrative and operating expenses such as purchases of raw materials and other operating expenses such as rental and utilities.

Shares of Lion Industries closed down one sen or 2.5% to 39 sen, giving the group a market capitalisation of RM280 million.

Looking to buy a home? Sign up for EdgeProp START and get exclusive rewards and vouchers for ANY home purchase in Malaysia (primary or subsale)!