Kinsteel unit in talks to form JV with Tianjin Qiangbang Industrial to run steel mill in Kedah
02 Apr 2020
PN17 company Kinsteel Bhd said its wholly-owned subsidiary Kin Kee Steel Service Centre Sdn Bhd (KKSSC) had entered into a letter of intent to start negotiation with Tianjin Qiangbang Industrial Co Ltd to form a joint venture company (JVC) to run a steel mill at Gurun, Kedah.
In a bourse filing, Kinsteel said that under the proposed transactions, KKSSC is expected to hold 45% shareholding in the JVC.
KKSSC, which is currently dormant, was previously involved in the manufacturing and trading of wire mesh, and it had ceased operations since December 2017.
Meanwhile, Tianjin Qianbang is principally engaged in the business or trades of steel smelting, rolling and making, with a share capital of 50 million Chinese yuan (RM30.65 million).
Kinsteel said the JVC shall be set up as a private company limited by shares in Malaysia with an expected paid-up capital of RM10 million, while KKSSC shall be tasked to secure all licences and approvals from relevant authorities relating to the production of steel products.
The core products involved are steel billet, wire rod, spring steel flat bar and laminated leaf spring.
Kinsteel added: “Barring any unforeseen circumstances, the proposed transactions are expected to contribute positively to the future earnings and improve the financial position of the company once JVC commences commercial production.”
The company said the proposed transactions do not form part of the proposed regularisation scheme announced on July 24, 2019, but will be implemented subject to completion of the proposed regularisation scheme.
It further added that the proposed transactions are not subject to the approval of Kinsteel’s shareholders.
However, the operations of the JVC are subject to procuring all the necessary licences and approvals from the relevant authorities.
Shares in Kinsteel last traded at 0.5 sen, giving it a total market capitalisation of RM5 million.
Source: The Edge Markets