KUALA LUMPUR: Southern Steel Bhd (SSB) and Ann Joo Resources Bhd (AJRB) today extended the period for entering into a definitive agreement for their joint venture by another 90 days, to April 6, 2020.
The two steel producers had on Oct 7, 2019 announced plans to combine forces via a joint venture that will focus on the long product steel manufacturing business in a RM1.65 bil deal.
Under the deal, AJRB will be selling its entire stakes in Ann Joo Integrated Steel Sdn Bhd, Ann Joo Steel Bhd and Saga Makmur Industri Sdn Bhd to the JV company for RM907.50 mil.
The move will see SSB selling its entire equity interests including assets and liabilities of its units Southern Steel Rod Sdn Bhd, Southern Steel Mesh Sdn Bhd, Southern PC Steel Sdn Bhd and Danstil Sdn Bhd to the JV firm for RM742.5 mil.
The JV will be a 45%-associated company of SSB and a 55%-subsidiary of AJRB via the issuance of new ordinary shares in the JV to SSB and AJRB.
The joint venture is aimed at promoting business efficacy and obtaining synergistic benefits for such businesses.
The JV is expected to realise operational and administrative synergies and efficiencies, enhanced cash management arising from the pooling of cash resources, joint marketing and savings through centralised procurement of raw materials and services.
It will also enhance the ability to compete in the international marketplace and be a major contributor to the industrial development of Malaysia.
The share price for Southern Steel at the end of Jan 6 was 82.5 sen, down 2 sen. Ann Joo Resources closed at RM1.35, down 3 sen. – Jan 6, 2020
