Contents :
1 Introduction
Southern Steel Berhad ( SSB or the Company ) writes to inform that Southern Steel Holdings Sdn Bhd ( SSH ), a wholly owned subsidiary of the Company, has on 30 March 2001 entered into a Sale and Purchase Agreement (the SPA ) to dispose of all those pieces of land and hereditaments known as Lot Nos 1202, 1203 and 1439 held under Geran (First Grade) No Pendaftaran 38941, 38942 and Geran Mukim (First Grade) No GM 40 respectively, all of Mukim 12, Daerah Seberang Perai Tengah, Penang, having a total area of 81.6767 acres (the said Properties ) to Malaysia Smelting Corporation Berhad (43072-A), a company incorporated in Malaysia and having its registered office at 27 Jalan Pantai, 12000 Butterworth ( MSCB ), for a total cash consideration of Ringgit Malaysia Eighteen Million Six Hundred and Nine Thousand Seven Hundred and Eighty-Four (RM18,609,784) (the Proposed Disposal ).
2 Information on companies
2.1 SSH
SSH was incorporated in Malaysia on 29 August 1988 and its principal activity is investment holding. It has an authorised capital of RM48,000,000 divided into 48,000,000 ordinary shares of RM1.00 each of which 48,000,000 ordinary shares have been issued and fully paid up.
2.2 MSCB
MSCB was incorporated in Malaysia on 8 November 1978 and was listed on the Main Board of the Kuala Lumpur Stock Exchange on 15 December 1994. Its principal activity is smelting of tin concentrates and tin bearing materials, production of various grades of refined tin metal under the MSCB brand name and sale and delivery of refined tin metal and by-products. It has an authorised capital of RM100,000,000 divided into 100,000,000 ordinary shares of RM1.00 each of which 75,000,000 ordinary shares have been issued and paid up.
3 Salient term of the Agreement
The said Properties will be disposed of with vacant possession free from all charges and other encumbrances but subject to all conditions of title whether expressed or implied, restrictions-in-interests and the existing category of use.
4 Consideration for the Proposed Disposal
The consideration of RM18,609,784 for the Proposed Disposal was arrived at on a willing buyer, willing seller basis after taking into consideration the market value of the said Properties as appraised by CH Williams Talhar & Wong.
SSHs original cost of investment on the said Properties acquired in September 1991 was RM5,962,369.91.
The consideration for the Proposed Disposal shall be payable as follows:
(a) On or before the execution of the SPA, MSCB shall pay a sum of Ringgit Malaysia One Million Eight Hundred and Sixty Thousand Nine Hundred and Seventy-Eight only (RM1,860,978.00) to SSH;
(b) The balance of the consideration amounting to Ringgit Malaysia Sixteen Million Seven Hundred and Forty-Eight Thousand Eight Hundred and Six Only (RM16,748,806.00) only shall be paid by MSCB to SSH on or before the expiry of fourteen (14) days of the date MSCB obtains or is deemed to have obtained the Foreign Investment Committee ( FIC )s Approval, or on or before the expiry of one hundred and eighty (180) days from the date of the SPA (whichever shall be later).
5 Rationale for the Proposed Disposal
The Proposed Disposal will help SSB Group reduce its borrowings.
6 Effects of the Proposed Disposal
6.1 Share Capital and Substantial Shareholdings
The Proposed Disposal will not have any effect on the share capital and substantial shareholdings of the Company.
6.2 Earnings and Net Tangible Assets
The Proposed Disposal is expected to generate an exceptional gain of approximately RM2.5 million at SSB Group level. However, it is not expected to have any material effects on the net tangible assets of SSB Group for the financial year ending 31 December 2001.
7 Directors and Substantial Shareholders Interests
None of the Directors, substantial shareholders of the Company or persons connected with them have any interest, direct or indirect, in the Proposed Disposal.
8 Conditions of the Proposed Disposal
The Proposed Disposal is subject to the FICs approval.
9 Directors Opinion
The Board of Directors of the Company having taken into consideration all aspects of the Proposed Disposal, is of the opinion that the Proposed Disposal is in the best interest of SSH.
10 Document available for inspection
A copy of the SPA is available for inspection at the Registered Office of the Company at Level 3, 2723 Lorong Perusahaan 12, Prai Industrial Estate, 13600 Prai, Penang during normal office hours from Mondays to Fridays (except public holidays) within 14 days from the date of this announcement.
This announcement is dated 30 March 2001.