's wholly owned subsidiary Kin Kee Steel Service Centre Sdn Bhd is entering negotiations with Tianjiin Qiangbang Industrial Co Ltd to form a joint venture company.It said in a filing with Bursa Malaysia it had entered into a letter of intent with the Chinese company with regards to the proposed joint venture, in which it will have 45% equity interest.
Qiangbang will have a 40% stake in the JV while an as yet unidentified local party of Malaysian origin will own the remaining 15% stake.
The joint-venture company will have an expected paid-up capital of RM10mil comprising 10 million ordinary shares.
Kinsteel believes that the collaboration will allow the parties to combine their operating capabilities and experience in the production of core products that include billets, wire rods, spring steel flat bars and laminated lead springs.
The JV is expected to contribute positively to the future earnings and improve the financial position of the Company once it commences commercial production.
"The Proposed Transactions will not have any effect on the share capital and substantial shareholders’ shareholdings of Kinsteel.
"It is also not expected to have a material effect on the net assets per share, earnings per share and gearing of Kinsteel group for the financial year ending 30 June 2020," it said.
According to the statement, Kin Kee Steel Service Centre was previously involved in the manufacturing and trading of wire mesh but had ceased operations in December 2018 and is currently dormant.
China-based Qiangbang meanwhile is principally engaged in business or trade of steel smelting, rolling and making.