KUALA LUMPUR (Jan 16): Singapore-based steel firm Green Esteel Pte Ltd has emerged as Southern Steel Bhd's (KL:SSTEEL) new controlling shareholder with a 50.1% stake in the company.
This follows the completion of the issuance of 752.06 million new shares to Green Esteel on Thursday at 42 sen apiece or a total of RM315.86 million, according to the group's bourse filing.
In effect, Southern Steel has now become a subsidiary of Green Esteel, alongside other Malaysian companies including Antara Steel Mills Sdn Bhd, Eden Flame Sdn Bhd and Esteel Enterprise Sabah Sdn Bhd. Green Esteel also holds 61.16% equity interest in Singapore-listed BRC Asia Ltd.
Green Esteel had sought for an exemption from Bursa Malaysia from the obligation to undertake a mandatory takeover offer as it intends to maintain the listing status of Southern Steel.
Prior to the issuance of new shares to Green Esteel, Hong Leong Investment Holdings Pte Ltd and its group of companies, including its co-founder tycoon Tan Sri Quek Leng Chan, were the largest shareholders in Southern Steel with a cumulative stake of 71.21%.
On Oct 29, Southern Steel entered into an agreement with Green Esteel in relation to the issuance of shares. Earlier on Sept 11, the two companies had signed a non-binding term sheet for the proposal.
Besides the issuance of shares to Green Esteel, Southern Steel also undertook a private placement of up to 152.74 million new shares to third-party investors at 42 sen per share, representing up to 10.18% of the enlarged issued capital, raising up to RM64.15 million.
Southern Steel previously said that the total gross proceeds of up to RM380.02 million from the two exercises will be used for the upgrading of the group's plants and working capital.
Southern Steel’s shares closed unchanged at 53 sen on Thursday for a market capitalisation of RM795.6 million. The stock has fallen over 15% this past year.