Lion Corp seeks to defer debt repayment

KUALA LUMPUR: Lion Corp Bhd, which owns 78.89% of the country’s sole hot rolled coils maker Megasteel Sdn Bhd, has sought to defer payments totalling RM83 million on its bonds, debts and loan stocks due on July 31 to Dec 31, 2011.

According to an announcement to Bursa Malaysia yesterday, Lion Corp said it had issued notices of meetings dated July 1 to the holders of the bonds, US dollar debts and redeemable convertible secured loan stocks (RCSLS). The meetings with the lenders are scheduled to be held on July 25.

The group seeks to defer the redemption of the outstanding nominal value of bonds amounting to RM54.35 million, the repayment of the outstanding nominal value of debts amounting to US$1 million, and the payment of the coupon on the securities amounting to RM26.97 million.

As at March 31, 2011, Lion Corp’s long-term borrowings, bonds and debts amounted to RM1.95 billion while its short-term borrowings, bonds and debts totalled RM867.29 million.

The company posted a net loss of RM34.35 million for its 3QFY11 ended March 31 against a net profit of RM18.53 million a year earlier. Lion Corp attributed the poor performance to lower sales volume as a result of low and sluggish demand for flat steel products in both the domestic and overseas markets.

Lion Corp topped the most actively traded counters yesterday. It closed two sen or 7.14% higher at 30 sen with 17.9 million shares changing hands.

The Lion group recently confirmed that it is in talks with various parties to form a strategic partnership aimed at growing the conglomerate’s steel manufacturing operations.

The group, which comprises Lion Diversified Holdings Bhd, Lion Industries Corp Bhd and Lion Corp, said the discussions are at an “exploratory stage, and accordingly there [is] no certainty [the talks] would lead to a more definitive and conclusive understanding between the parties.”

The Edge Financial Daily had on June 23 reported that the Lion group was expected to consolidate its steel business soon, in order to pave the way for the entry of a foreign strategic partner to help grow its steel operations.

It is learnt that the group has started meeting steel players from various countries, including China’s Baosteel Group, which have shown interest in its steel operations. The source had also indicated that the potential foreign partner would eventually participate in Lion’s entire steel business.