Highlight Perwaja approaches China’s Zhiyuan for capital injection and rescue plan

by **Cals** Thu 12 Feb 2015, 01:29

Highlight
Perwaja approaches China’s Zhiyuan for capital injection and rescue plan

By Charlotte Chong / theedgemarkets.com | February 11, 2015 : 8:29 PM MYT

KUALA LUMPUR (Feb 11): Ailing steel producer [size=14]Perwaja Holdings Bhd ([You must be registered and logged in to see this image.] Financial Dashboard) has approached China-based alloy manufacturer Zhiyuan Investment Group Co Ltd for the possibility of capital injection, as well as to revive the former’s steel operations in Kemaman, Terengganu.

In an announcement to Bursa Malaysia today, Perwaja (fundamental: 0; valuation: 0) said it had entered into a Memorandum of Agreement (MoA) with Zhiyuan, for the latter to conduct a feasibility study on a proposal to invest in the steel producer.

Under the MoA, Zhiyuan could also propose to Perwaja, such business transformation model for the restructuring and revival of the latter’s steel operations in Kemaman.

This could involve transforming Perwaja’s operations for the production of premium metal-steel related products, which may include the acquisition of Zhiyuan’s existing premium metal-steel related operation.

According to Perwaja, Zhiyuan shall conduct and complete the feasibility and technical study of the Kemaman operation; and a due diligence exercise on Perwaja’s financial affairs within two months from the date of the MoA.

“Zhiyuan is desirous to expand its businesses to Malaysia, and to conduct a feasibility study with a view to revive, operate and/or transform the Kemaman Plant in particular, as part of its global business expansion plan,” Perwaja added.

Perwaja slipped into PN17 on Nov 26, 2013, and the company is required to submit its regularisation plan to Bursa Malaysia.

Ahead of the MoA announcement in the evening, the counter had soared 40% or 3 sen to finish at 10.5 sen at market close, giving it a market capitalisation of RM58.80 million.

Kinsteel Bhd ([You must be registered and logged in to see this image.] Financial Dashboard), controlled by the Pheng family, owns 31.25% equity interest in Perwaja — down from 37.34% on Nov 28 last year.

[size=12](Note: The Edge Research's fundamental score reflects a company's profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)[/size]
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