Amsteel Mills - Continuous Casting Machine Colling Bed
KUALA LUMPUR: Lion Industries Corp Bhd
is selling its office building in Klang to Yinson Corp Sdn Bhd for RM47.7mil through a sale and leaseback arrangement.
In a statement to Bursa Malaysia, the steel product manufacturer said the proceeds would partly set off its 99%-owned Amsteel Mills Sdn Bhd’s outstanding debts to Yinson Corp without disrupting the plant operations.
Amsteel Mills’ outstanding debts to Yinson Corp as at March 31 stood at RM83mil.
Amsteel Mills will lease the Klang industrial premises back from Yinson Corp for five years, with an option to renew for another five. It will pay RM187,500 in monthly lease rental, which works out to RM22.5mil for the 10 years.
During this 10-year period, it also has the option to buy back the property at an agreed exercise price.
Yinson Corp is a unit of Liannex Asia Pacific Sdn Bhd, which is owned by Yinson Holdings Bhd directors and major shareholders. It provides transport services and trades in construction materials.
Explaining the rationale for the arrangement, Lion Industries said: “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.”
As such, it said, the sale of the property would not have impact to the group earnings.
Lion Industries posted earnings of RM52.95mil for the first six months of the financial year ending June 30, 2017, up from RM8.09mil in the previous year’s corresponding period.
* The original headline and first paragraph of this story have been changed following Lion Group's clarification that only its office building - not its plant - is affected under the agreement. The original headline was Lion Industries sells steel plant to Yinson to set off debts
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