HG Metal Manufacturing has entered into a subscription agreement for 18,000,000 Class B Preference Shares in Eden Flame for RM1 per share, amounting to RM18 million ($5.68 million).
Eden Flame is a Malaysian steel manufacturer with a plant in Pasir Gudang, Johor Bahru. It is targeted to commence operations by the third quarter of 2026, with a specialisation in low-carbon electric arc furnace steel.
The plant will have an estimated annual production capacity of approximately 500,000 metric tonnes and its initial product focus is on 10mm – 40mm rebars, which is a high-demand segment in Southeast Asia, the group notes.
The aggregate consideration of RM18 million, of which RM9 million is to be paid upon completion, and the remaining RM9 million is payable as and when call notices are issued by Eden Flame after completion. The completion of the proposed subscription will take place on a date to be mutually agreed between the two parties.
HG Metal says that the consideration will be funded through the company’s internal resources from existing working capital and/or proceeds previously raised from rights issues.
The Class B Shares will be issued as non-redeemable, non-cumulative preference shares that carry preferential dividend rights to ordinary shares of Eden Flame. The Class B Shares are convertible into ordinary shares based on a 1:1 ratio and represent approximately 4.4% of Eden Flame’s post-completion enlarged shares.
HG Metal says that the proposed subscription is part of its broader strategic initiative to strengthen its supply chain position in the regional steel market. It believes an equity stake in Eden Flame gives it a source of reliable and competitive low-carbon steel.
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“This upstream investment will not only provide us a reliable and competitive source for low-carbon steel, but will also help to position HG Metal for the future as the demand for low- carbon steel in Singapore and the rest of Southeast Asia increases,” says Xiao Xia, executive director and CEO of HG Metal.
Shares in HG Metal closed flat at 49 cents on Dec 10.
