Acesteel to be a subsidiary of SSM

Alvin Tang

KUCHING: YKGI Holdings Bhd’s wholly-owned subsidiary Star Shine Marketing Sdn Bhd (SSM) has entered into a debt settlement arrangement with Acesteel Industries Bhd, which owes the former RM3.5 million.

The settlement is via the issuance of 1,428,571 new ordinary shares representing 51.41 percent of the enlarged share capital of Acesteel to SSM to settle the entire RM3.5 million debt.

The new Acesteel shares are priced at RM2.45 each, YKGI said in a filing with Bursa Malaysia. Upon completion of the debt settlement expected in the current quarter, Acesteel will become a subsidiary of SSM. Its operation will remain with the existing management of Acesteel.

Acesteel’s principal activity is a processor and distributor of iron and steel, specialising in the trading and processing of metal roofing, steel truss and roofing accessories.

Since its factory in Senai commenced operation in 2008, Acesteel, according to YKGI, has since grown and positioned itself as one of the leading players in the metal roofing system in Johore  The roofing products are sold to property developers,contractors,metal roofing installers and hardware shops and distributors.

“Acesteel is a customer of SSM whereby it supplies coated steel coil to Acesteel for the production of roofing products.
“Over the years,due to the expansion of business, Acesteel is in need of working capital to further increase its business volume.
“The conversion of a portion of its debts due to SSM into equity is an opportunity for Acesteel to improve its liquidity and working capital,” said YKGI.

On the rationale for the proposed debt settlement,YKGI said it would provide an opportunity for the company to gain a foothold in the downstream business with the control of Acesteel.

“This is in line with the proposed business plan of YKGI post disposal of coated coil business (in second quarter 2019) to develop and expand its downstream steel business in West Malaysia.

“With the acqusition of Acesteel, it will provide a platform for YKGI group to escalate its plan to further expand its downstream business in West Malaysia, reinforcing the group’s current business of which its major subsidiary Asteel Resources Sdn Bhd is currently the market leader in the metal roofing segment in East Malaysia,” it added.

In April, YKGI completed the disposal of loss-making coated coil business in West Malaysia to NS BlueScope (Malaysia) Sdn Bhd for RM125 million in cash.

In first quarter ended March 31, 2019, YKGI had reported that the gross margin in its downstream business improved by about 26 percent as compared to 1Q-2018, thus pushing up group’s pre-tax profit to RM1.37 million from RM810,000 despite drop in group revenue to RM51.3 million from RM55.4 million during the same period.

Meanwhile, Zecon Bhd has completed the private placement of about 13.1 million new ordinary shares representing 10 percent of its issued shares with the listing and quotation of the new shares on Bursa Malaysia on July 17.

Based on 25 sen per new shares, Zecon raised about RM3.28 million from the private placement. The proceeds are used to address the group’s general working capital requirement for the time being.

Debt-laden Zecon group’s liabilities stood at RM715.71 million against current assets of RM228.62 million based on its audited account of June 30, 2018.

Next Post

Disappointing Q2 subscriber growth

ShareTweetSharePinSAN FRANCISCO: Netflix shares plunged  in after-hours trade Wednesday after its quarterly update showed weaker-than-expected subscriber growth for the streaming television sector leader. Netflix said it added 2.7 million new subscribers worldwide in the April-June period, well below expectations, as the sector prepared for offerings from rival groups including Walt […]

Follow Us on Facebook