Mycron Steel’s RM30m Shah Alam property acquisition goes unconditional

Mycron Steel Bhd’s RM30 million acquisition of an industrial property in Shah Alam from its parent company, Melewar Industrial Group Bhd, has become unconditional. The property, which includes a factory and office on 232,178 sq ft of leasehold land, was valued at RM30.5 million and is currently occu

PETALING JAYA (Oct 7): Steel group Mycron Steel Bhd’s proposed RM30 million acquisition of an industrial property in Shah Alam from its parent, Melewar Industrial Group Bhd (MIGB), has become unconditional.

In a Bursa Malaysia filing on Tuesday (Oct 6), Kenanga Investment Bank Bhd, on behalf of Mycron’s board, said all conditions precedent under the sale and purchase agreement and deferred payment agreement were fulfilled on Oct 2. Both agreements became unconditional that day.

The acquisition is being undertaken by Mycron’s wholly-owned subsidiary, Melewar Steel Tube Sdn Bhd (MST), which entered into the sale and purchase agreement with MIGB on June 15. The property at Lot 10, Persiaran Selangor, Seksyen 15, comprises approximately 232,178 sq ft of leasehold industrial land with a single-storey detached factory, an adjoining single-storey office and ancillary buildings. Its gross floor area is approximately 140,404 sq ft.

Held under title PN 121387, Lot 10461, in Shah Alam, Petaling district, Selangor, the property is on a 99-year lease expiring on May 11, 2085. In its June announcement, Mycron said MST occupied the property as its corporate office and factory at a monthly rent of RM175,000, or RM2.1 million a year. The company said the acquisition would eliminate those rental expenses and its exposure to potential rental increases upon expiry and renewal of the tenancy. Ownership would also provide greater flexibility to upgrade or reconfigure the facilities and reduce the risk of operational disruption associated with tenancy uncertainty or relocation.

The RM30 million purchase price was agreed on a willing-buyer, willing-seller basis, taking into account an independent valuation of RM30.5 million by PA International Property Consultants (KL) Sdn Bhd as at June 5. Under the funding arrangement announced in June, RM24 million, or 80 per cent of the purchase price, will be financed through bank borrowings. The remaining RM6 million will be settled under a deferred payment arrangement over 64 months.

The acquisition is a related-party transaction. MIGB held a 74.13 per cent stake in Mycron as at June 9, according to the June announcement. Under the agreement terms, the existing tenancy will automatically terminate upon completion of the acquisition. Tuesday’s filing did not announce completion.