KUALA LUMPUR (Dec 9): Melewar Industrial Group Bhd (MIG), which is known as a steel producer, is now going to focus on its engineering business.
This new business direction came after the group proposed to dispose of its wholly-owned steel-making subsidiary, Melewar Steel Tube Sdn Bhd (MST), to Mycron Steel Bhd (Mycron) for RM70 million.
"After the disposal, we will be left with our engineering arm, which mainly involve in EPC (engineering, procurement, and construction), consultancy, and operations and maintenance," MIG group managing director Azlan Abdullah said, after all the group's extraordinary general meeting (EGM) today.
"In fact, we are approaching some big names for works, like Siemens," he added.
MIG entered into a conditional share sale and purchase agreement for the disposal of MST with Mycron, on Sept 12. MIG presently owns 54.79% of Mycron.
As the purchase consideration requires Mycron to partially pay for the acquisition by issuing 104.55 million shares worth RM46 million — which represents a 16.73% stake in the company — to MIG, MIG will end up owning a 71.52% stake in Mycron, after the acquisition is completed.
The remainder of the purchase consideration will be satisfied via a novation of debt, amounting to RM24 million, by MIG to Mycron.
While the group focuses more on existing engineering turnkey works, it is currently also studying the opportunity of waste disposal business, and intends to kick off the segment in the first quarter of 2015, said MIG chief technical officer Uwe Ahrens.
He revealed that the group is in discussion with several parties, one of which is Alam Flora Sdn Bhd — the company that provides waste management services to Kuala Lumpur, Putrajaya, and Pahang.
"This is one of our measures to create more recurring incomes for the group. But in the short term, revenue contribution [from the new segment] would be immaterial," the 49-year-old German said.