Mycron Steel to buy HQ property from shareholder Melewar for RM30 mil

KUALA LUMPUR (June 16): Mycron Steel Bhd (KL:MYCRON) is moving to take ownership of the Shah Alam property housing its manufacturing operations in a RM30 million deal that it says will reduce rental costs and provide greater flexibility for future expansion plans.

In a bourse filing on Monday, the steel products manufacturer said its wholly-owned subsidiary Melewar Steel Tube Sdn Bhd has agreed to acquire the industrial property located in Section 15, Shah Alam, from parent company Melewar Industrial Group Bhd (KL:MELEWAR).

The property currently serves as Mycron Steel’s factory and corporate office. Mycron Steel said the acquisition would allow the group to save about RM2.1 million a year in rental expenses, while removing exposure to potential rent increases when the existing tenancy expires in May 2028.

Mycron Steel said it plans to finance the acquisition through a combination of borrowings and deferred payments to Melewar Industrial. About RM24 million will be funded through bank loans, with the remaining RM6 million to be paid over a 64-month period.

The proposed acquisition is classified as a related-party transaction (RPT) as Melewar Industrial holds a 74.13% stake in Mycron Steel.

Owning the property would reduce the risk of operational disruption linked to lease renewal uncertainty or potential relocation, while providing greater flexibility to upgrade and reconfigure the facility for future operational needs, including its green energy initiatives, it added.

In the filing, Mycron Steel said the property comprises a leasehold industrial land parcel together with a detached factory building, office and related facilities.

An independent valuation placed the market value of the property at RM30.5 million as at June 5, slightly above the agreed purchase price of RM30 million.

Kenanga Investment Bank Bhd was appointed to act as the principal adviser for the proposed acquisition. Meanwhile, Mercury Securities was appointed as independent adviser due to the nature of the deal being an RPT.

Shares of Mycron Steel closed flat at 26 sen on Monday, giving the group a market capitalisation of RM85 million.

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