Source: The Edge
After nearly eight months, Southern Steel Bhd and Ann Joo Resources Bhd have mutually agreed to terminate its planned partnership to synergise opportunities in the long steel product manufacturing business.
According to a filing with Bursa Malaysia today, Southern Steel noted that both the companies have agreed to terminate the Memorandum of Understanding (MoU) with immediate effect “due to uncertain market conditions caused by the COVID-19 pandemic”.
Southern Steel pointed out that the termination of the MoU is not expected to have any material effect on the company’s consolidated earnings and net assets per share for the financial year ending June 30, 2020.
In October last year, the duo wanted to form a joint venture company (JV Co) to venture into the long steel product business.
Under the MoU, Southern Steel would be selling the entire equity interests including assets and liabilities of its units Southern Steel Rod Sdn Bhd, Southern Steel Mesh Sdn Bhd, Southern PC Steel Sdn Bhd and Danstil Sdn Bhd to the JV Co for RM742.5 million.
Meanwhile, Ann Joo would divest its entire interest in Ann Joo Integrated Steel Sdn Bhd, Ann Joo Steel Bhd and Saga Makmur Industri Sdn Bhd to the JV Co for RM907.5 million.
The new JV Co was supposed to be a 45%-associate company of Southern Steel and a 55%-subsidiary of Ann Joo via the issuance of new ordinary shares.
Shares of Southern Steel were unchanged at 47 sen, valuing the company at RM280.27 million. Over the past year, the counter has fallen 47.78% from 90 sen.
Ann Joo’s shares were 1.5 sen or 2.11% higher at 72.5 sen, bringing its market capitalisation to RM405.94 million. Its share price over the past year has fallen 50.68% from RM1.47.