Ann Joo's Unit Has New Potential Buyer After Deal With Southern Steel Falls Through
KUALA LUMPUR, May 22 (Bernama) -- Ann Joo Resources Bhd (Ann Joo) has proposed to dispose of its 100 per cent equity interest in Ann Joo Steel Bhd (AJSB) to Singapore-based Green Esteel Pte Ltd following the mutual termination of a heads of agreement to sell the stake to Southern Steel Bhd today.
The maker of steel and steel-related products said the proposed disposal, however, excludes the disposal of four pieces of land in Perak and Penang together with all buildings and structures owned by AJSB.
While the cash consideration to be paid by Green Esteel will be determined later following an independent audit, Ann Joo said its board sees RM348.73 million as a justifiable disposal consideration based on AJSB’s financial performance and implied price-to-book multiple of 1.89 times.
In a filing with Bursa Malaysia, it said the proposed disposal is in line with the strategy of the Ann Joo group to exit the upstream steel business.
AJSB, which manufactures billets and rebars, has recorded losses since the financial year ended Dec 31, 2023.
According to Ann Joo, the proposed deal will stem further potential losses of AJSB and AJSB’s wholly owned subsidiary Ann Joo Integrated Steel Sdn Bhd and allow the Ann Joo Resources group to refocus its resources to expanding its downstream steel business.
“(The downstream business) includes steel-related activities such as steel fabrication works, engineering services for the automotive and electricity sectors, as well as engineering, design and construction works for the electrification industry,” it added.
Based on the illustrative gross proceeds of RM348.73 million, Ann Joo said it plans to utilise RM230 million for the repayment of bank borrowings and RM118.22 million for working capital, both within 12 months of the share disposal.
The remaining RM500,000 will be used to defray expenses related to the proposed sale.
Subject to obtaining the approval of the company’s shareholders, the proposed disposal is expected to be completed by the second half of 2026, Ann Joo said.
-- BERNAMA