Source: The Star Online
KINSTEEL BHD has proposed to form a joint venture (JV) in which it will own 45% with a China partner Tianjin Qiangbang Industrial Co Ltd (TQI) to operate a steel plant in Gurun, Kedah.
The proposal which had been proposed through a letter of intent (LOI) will see the PN-17 company leading the joint venture while TQI will have a 40% stake in the operations of the plant.
Kinsteel told Bursa Malaysia that another 15% will be owned by a Malaysian partner that will be identified later on.
According to the announcement, TQI is a steelmaker in Tianjin, China and its owners are Zhao Xiu Lin who has a 52% stake and Zhao Xiu Yong who has a 48% stake.
Kinsteel will hold this 45% stake in the JV through its unit Kin Kee Steel Service Centre Sdn Bhd.
“The JV company shall be set up as a private company limited by shares in Malaysia with an expected paid-up capital of RM10mil comprising 10 million ordinary shares. Kinsteel shall be tasked to secure all licences/ approvals from relevant authorities, ” it said.
The planned core products are billet, wire rods, spring steel flat bar and laminated leaf spring, the announcement said.
The plant has an installed capacity of 500,000 tonnes and is targeted to begin operations in March 2021, it said.
Kinsteel said that this plan is expected to contribute positively to the future earnings and improve its financial position once the JV co commences commercial production.
It noted that these proposals are not part of the proposed regularisation scheme of the company which was announced on July 24,2019; but will be implemented subject to the completion of the proposed regularisation scheme.
Kinsteel also noted that the provisions and terms of the LOI may at any time be varied or amended by mutual consent of any of the parties in writing.