Friday, February 11, 2011

Megasteel unit to issue RCPS to Lion Forest for USD17m

KUALA LUMPUR: Lion Corp Bhd's unit Megasteel Sdn Bhd has proposed to issue preference shares with a total value of US$17 million to LION FOREST INDUSTRIES BHD [] (LFIB).

Lion Corp said on Thursday, Feb 10 it had entered into a conditional subscription agreement with Jadeford International Ltd ' a unit of LFIB --'' for the issuance of 17 million three-year redeemable cumulative preference shares (RCPS) of US$1 each for US$17 million cash.

'The proceeds from the proposed Issuance of RCPS amounting to USD17 million will be utilised for the repayment of Megasteel's existing US dollar and ringgit syndicated term loans,' it said.

Lion Corp said the proposed issuance of RCPS was deemed a related party transaction. OSK Investment Bank Bhd was appointed by the company to act as the independent adviser to advise the non-interested directors and minority shareholders of on the fairness and reasonableness of the proposed Issuance of RCPS and whether it is detrimental to the minority shareholders of the company.

It added the proposed Issuance of RCPS was not expected to have any material effect on the earnings and earnings per share of the Lion Corp group for the financial year ending June 30, 2011.

'The company intends to submit the application to the relevant authorities within one month from the date of this announcement. The proposed issuance of RCPS is expected to be completed by March 2011,' it said.

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