KUALA LUMPUR (June 20): Press Metal Aluminium Holdings Bhd (KL:PMETAL) is planning to sell its entire 25% stake in aluminium oxide producer PT Bintan Alumina Indonesia (PTBAI) in exchange for a 25.59% stake in Hong Kong firm Nanshan Aluminium International Holdings Ltd (NAIHL) in a deal worth US$329.8 million or RM1.55 billion, ahead of NAIHL's listing on the Hong Kong stock exchange.

Press Metal acquired the 25% stake in PTBAI in 2020 to secure a stable supply of alumina, which is one of the key raw materials it needs for its smelting operations, and to reduce reliance on third-party suppliers. NAIHL currently owns 72.7% in PTBAI, held indirectly via its wholly owned subsidiaries.

Press Metal's proposed stake sale comes after shareholders' approval was obtained last November for a spin-off listing of PTBAI on Hong Kong's stock exchange.

Press Metal said the proposed share swap and listing are expected to result in savings in its capital investment costs for PTBAI, as NAILH, which was incorporated primarily as the vehicle for the proposed listing, would be able to tap into Hong Kong's equity capital market for future fundraising activities, which could be channelled to benefit PTBAI.

"We believe that the company's participation in the Hong Kong capital market through its direct shareholdings in NAIHL will be a positive contribution to the company's overall financial liquidity and financial position," Press Metal said.

Hence, it has inked an agreement to sell the 25% stake in PTBAI to Hong Kong Prime Aluminium Investment Ltd (HKPAI) for US$329.8 million, to be fully settled through the issuance of a promissory note by HKPAI to Press Metal. HKPAI is a wholly owned unit of NAIHL.

At the same time, it will subscribe for 25.99 million shares that is equivalent to a 25.59% stake in NAIHL for the same value, via Press Metal International Resources (HK) Ltd, also to be fully satisfied by a promissory note issued to NAIHL.

On completion of the subscription, NAIHL intends to apply for the listing of its shares on the Main Board of the Stock Exchange of Hong Kong, said Press Metal.

“Following the proposed share swap, the company anticipates that it will continue leveraging on the intangible benefits arising from its investment, with the facilitation of technical capability along the aluminium and alumina production chain, and the ability to improve the cost and capital efficiency of the supply chain,” Press Metal said.

“The proposed share swap is in line with the Press Metal group's expansion initiatives and current growth projection of the world primary aluminium demand,” Press Metal said, adding that the exercise is expected to be completed before July 31.

At Thursday’s closing bell, shares of Press Metal were two sen or 0.35% higher at RM5.80, giving it a market value of RM47.79 billion. The counter has gained over 19% year-to-date.