Source: The Star Online
Lion Industries Corp Bhd is selling one of its steel factories to Yinson Corp Sdn Bhd for RM47.7mil through a sale and leaseback arrangement.
Through the sale and leaseback arrangement, Lion Industries said that it could use the proceeds to partly settle its debt to Yinson without disrupting its plant operations.
In a filing with Bursa Malaysia, Lion Industries said its unit Lion Metal Industries Sdn Bhd had entered into a sale and purchase agreement with Yinson for the disposal of a 3.23-ha parcel of land in Klang, Selangor, for RM45mil excluding tax.
Meanwhile, another unit of Lion Industries, Amsteel Mills Sdn Bhd, has entered into a lease agreement with Yinson for the lease of the property on the land for a period of five years, with an option to renew for another five years. “The proposed sale and leaseback enables the Lion Group to unlock the value of its fixed assets by transacting the property after taking into consideration the prevailing market value in order to partially settle the outstanding trade debts owing by Amsteel to Yinson,” Lion Industries said.
As such, it said that the sale of the property would not have an impact on the group earnings.
“The proposed leaseback will ensure that the ongoing business operations of Amsteel are not disrupted and its operations will continue at the property as usual,” Lion Industries said.In addition, the group said that under the agreement, there is a purchase option for the company to buy back the property from Yinson.Lion Industries is involved in the manufacturing of long-steel products at three mills. Amsteel produces billets for the group in Klang.
It said that the Amsteel plant in Klang was valued by PPC International Sdn Bhd at RM45mil, which is a premium of RM22.51mil over the audited net book value of the property as at June 30, 2016.