Kuala Lumpur: Southern Steel Bhd (SSB) has entered into an agreement to divest a 55 percent stake in its wholly owned subsidiary, Southern Steel Mesh Sdn Bhd (SSM), to the Singapore-based company BRC Asia Ltd. The transaction, valued at RM61.05 million cash, is classified as a related party transaction, marking a significant shift in SSB’s business dynamics.

According to BERNAMA News Agency, SSB, known for its investments in steel manufacturing and trade, including steel bars and wire rods, has decided to sell part of its stake in SSM, which specializes in steel wire mesh and concrete wires. The decision follows an initial non-binding term sheet signed on February 28, 2025, indicating plans for both the sale of 12.88 million shares and a proposed new share subscription by BRC. However, subsequent discussions led to the abandonment of the subscription plan, focusing solely on the disposal.

UOB Kay Hian Securities (M) Sdn Bhd, representing SSB’s board, announced the execution of a conditional share purchase agreement with BRC regarding the stake sale. Post-transaction, BRC will hold a 55 percent stake in SSM, transforming it into an associate company of SSB, which will maintain a 45 percent stake.

SSB anticipates that the disposal will generate RM61.05 million, which will be utilized to bolster its working capital. The proceeds are earmarked for a range of operational needs, including payments to suppliers and creditors, administrative expenses, and other operational costs.

The transaction’s completion is contingent upon obtaining necessary approvals, with expectations set for the second half of 2025. SSB plans to submit the requisite applications to relevant authorities within two months. UOB Kay Hian has been designated as the principal adviser for this proposed disposal.