Posted on 06 Oct 2026
Southern Steel Bhd has signed a conditional three-year tenancy agreement with Deep Source (PN) Sdn Bhd for proposed data centre use of its existing steel plant and surrounding premises in Seberang Perai Tengah, Penang.
The agreement carries monthly rent of RM917,250, equivalent to RM11.01 million annually and RM33.02 million over the full three-year term, subject to the tenancy commencing after the conditions are fulfilled.
In a Bursa Malaysia filing on Friday (Oct 2), the steelmaker said the agreement, signed on Oct 1, covers 6.29513 hectares of leasehold land in Mukim 01, together with existing buildings, structures, fixtures and improvements.
The tenancy is subject to Southern Steel obtaining consent from the Penang State Authority and Penang Development Corporation (PDC) for the rental, use of the existing steel plant as a data centre and, where applicable, construction of buildings or structures on the land.
Other corporate and regulatory approvals required for the tenancy must also be obtained. The conditions must be fulfilled within 90 days of the agreement, unless both parties agree to extend the period.
The three-year tenancy will begin upon delivery of vacant possession, which will occur within 14 days after the final condition is fulfilled.
Deep Source provides hosting infrastructure and data processing services. It is wholly owned by Deep Source Holdings Ltd, which is listed on the Main Board of the Hong Kong stock exchange.
Southern Steel said Deep Source Holdings and its controlling shareholder You Zhenhua are indirect substantial shareholders of the steelmaker through their respective interests in Green Esteel Pte Ltd, which holds a 50.10% stake in Southern Steel.
Chairman Seah Kiin Peng and director Zhang Cheng, both Green Esteel nominees, abstained from all board deliberations and voting on the transaction.
The company said the tenancy is “not regarded as a related party transaction” under paragraph 10.08(11)(h) of Bursa Malaysia’s Main Market Listing Requirements and does not require shareholder approval.
Independent valuer CBRE WTW Valuation & Advisory Sdn Bhd assessed the premises’ overall market rental at RM1.35 per sq ft a month over the total land area, based on prevailing rents for comparable buildings and land.
The premises comprise nine title interests: PN 7882, Lot 6350; HSD 30934, PT 2992; HSD 30938, PT 2996; HSD 46354, PT 3039; HSD 60079, PT 4564; HSD 60077, PT 4562; HSD 60078, PT 4563; HSD 37943, PT 3057; and part of PN 10623, Lot 10092.
Southern Steel owns all the land except HSD 37943, PT 3057, which belongs to its wholly owned subsidiary Southern Steel Properties Sdn Bhd. The subsidiary has authorised Southern Steel to include the parcel in the tenancy.
Southern Steel said the agreement is expected to provide consistent revenue and cash flow throughout the tenancy term and contribute positively to the group’s financial results.
Source:EdgeProp
