Lion Corp proposes to issue shares, undertake capital-reconstruction move

PETALING JAYA: Lion Corp Bhd, an investment holding company primarily engaged in the manufacturing and sale of steel, has proposed to issue up to 950 million ordinary shares pursuant to a proposed settlement scheme, undertake a capital-reconstruction exercise and provide financial assistance in relation to the issuance of new shares.

In a statement to Bursa Malaysia, Lion Corp explained that the proposed settlement scheme totalling up to RM950mil due by its 79%-owned subsidiary, Megasteel Sdn Bhd, to the latter's unsecured creditors with an overdue amount of RM500,000 and above each as at April 30, 2011, would be satisfied by the issuance of one new ordinary share at par value of RM1 each in Lion Corp. It would also involve a deferred cash payment of 20 sen for every RM1 of the overdue amount under the proposed settlement scheme.

Lion Corp said the source of funding for the proposed cash settlement scheme would be from the proposed investment by new investors. The group was currently conducting discussions with potential new investors for the scheme. However, in the event the proposed investment by new investor did not materialise, Megasteel will attempt to seek other alternative forms of funding, which may include internally-generated funds or a fund-raising exercise which may include proceeds raised from the realisation of certain assets/investments in the Megasteel group.

To recap, Lion Corp in June announced that it had together with its related companies, namely Lion Diversified Holdings Bhd and Lion Industries Corp Bhd, commenced preliminary discussions with various parties regarding a potential strategic collaboration. The potential strategic collaboration entails the proposed investment by the new investor, who may invest in the steel-making companies within the group and its subsidiaries.