KUALA LUMPUR (Oct 23): ABM Fujiya Bhd (KL:AFUJIYA) said on Wednesday that Chinese battery maker Jujiang Power Technology Co Ltd will subscribe for a 40% stake worth RM48 million in one of its wholly-owned unit.

The consideration for the stake in Fuya Energy Sdn Bhd will be offset with most of the cash advanced earlier from Jujiang, ABM said in an exchange filing. That means there would not be any cash proceeds for Fuya Energy from the issuance of new shares to Jujiang.

Jujiang can share its knowledge and experience relating to lithium battery production technology and once the deal is completed, “revenue of the group is expected to be increased, which will translate into the improvement of its profits,” ABM said.

The share subscription follows a memorandum of understanding signed earlier this month between ABM and Jujiang to explore and evaluate the possibility of setting up a new battery manufacturing plant in Malaysia worth RM500 million.

Fuya Energy, which manufactures batteries and accumulators, is currently 100%-owned by Amalgamated Batteries Manufacturing (Sarawak) Sdn Bhd, which is in turn wholly-owned by ABM Fujiya.

Jujiang had provided cash advances totalling RM56.38 million so far to Fuya Energy. The subscription will allow Fuya Energy to settle the majority of the debt owed to Jujiang “in an expeditious manner,” the company said. 

The cash advances were used by Fuya Energy to part-finance the construction of a factory which was completed in December 2022. To-date, Jujiang has not charged any interest on the cash advances, ABM noted.

The share subscription agreement is subject to shareholders’ approval in an extraordinary general meeting to be held at an undetermined date.

Overall, the share subscription is expected to be completed within one year, ABM added.

ABM Fujiya closed unchanged at 33 sen on Wednesday, giving it a market capitalisation of RM59.4 million.