Source: The Edge
Eonmetall Group Bhd has formed a joint venture with two other companies to purchase a parcel of land measuring 420 acres in Klang, Selangor, for RM155.73 million. The land is currently an oil palm plantation registered under Sime Darby Plantation Sdn Bhd.
In an exchange filing today, Eonmetall said a JV company (JVco) named Sinaran Seribumi Sdn Bhd was formed between its wholly-owned subsidiary Eonmetall Land Sdn Bhd, with Kapar Holding Sdn Bhd and Kapar Land Sdn Bhd. Kapar Holding and Kapar Land are both in the business of manufacturing iron and steel products, as well property dealing.
Eonmetall said the JVco was set up to undertake the land acquisition with expedient funding. After the completion, the JV parties will work towards sub-division and transfer of the divided lots, in accordance with their shareholding proportions.
Given Eonmetall Land’s 23.81% shareholding in Sinaran, the group's estimated investment outlay is RM37.14 million, for which it will receive 100 acres of the sub-divided land.
Kapar Holding and Kapar Land, meanwhile, will be transferred 172 acres and 148 acres, based on their shareholding in Sinaran of 40.95% (RM63.88 million) and 35.24% (RM59.97 million) respectively.
Eonmetall plans to fund its portion via internally-generated funds or bank borrowings.
It said the JV would help to avoid unnecessary delays, which is important, as the strategic piece of land will appeal to many other prospective purchasers due to excellent public infrastructure; proximity to Port Klang, Selangor, for export markets; as well as proximity to the domestic market.
“The group’s long-term growth plan includes relocation of certain business activities to Port Klang, Selangor, to minimise operational costs in connection with the nature of the group’s export business, as well as to improve overall effective cost management.
“The intention of the group to establish manufacturing cum warehouse facility to accommodate future expansion of business activities in the central region as aforesaid, will enable the group to capitalise on its new centralised location to seek opportunities in other and new domestic markets operating in the central and southern regions of Peninsular Malaysia.”
Eonmetall's cash and cash equivalents at March 31, which is the end of its financial year 2019 (FY19), stood at RM12.25 million.
It expects relevant applications to the authorities in relation to the proposed JV to be completed within 85 days from its unconditional date.
At market close today, its shares finished one sen lower to 37 sen, for a market capitalisation of RM68.53 million.