KUALA LUMPUR (Sept 11): EP Manufacturing Bhd (KL:EPMB) is placing out shares representing 30% of its issued share capital, 15% each to its largest shareholder Mutual Concept Sdn Bhd and a subsidiary of Bermaz Auto Bhd (KL:BAUTO), to raise RM39.65 million to part finance the construction of its manufacturing hub in Melaka.

EPMB, an automotive parts and components manufacturer, has entered into a conditional share subscription agreement with both Mutual Concept and Bermaz Capital Sdn Bhd for the proposed placement that involves a total of 66.08 million shares at 60 sen apiece, according to its bourse filing on Wednesday.

Mutual Concept is the private vehicle of EPMB’s executive chairman, founder and major shareholder Hamidon Abdullah. Mutual Concept currently owns 9.71% of EPMB’s issued shares totalling 220.28 million units as of Aug 30. Post-placement, Mutual Concept’s stake in EPMB will increase to 19.01% of its enlarged share base of 286.37 million shares.

Bermaz Capital — formerly Bermaz Anshin — is a wholly owned subsidiary of Bermaz Auto. Post-placement, Bermaz Capital will own 11.54% of EPMB’s enlarged share base, making it the second largest shareholder after Hamidon.

Bermaz Auto's investment into EPMB, its first in another public-listed company, raises speculation as to whether EPMB will be assembling Bermaz Auto’s upcoming models. At the moment, all Bermaz Auto’s locally assembled models are produced at Inokom Corp Sdn Bhd’s plant in Kulim, Kedah.

EPMB, which has secured two vehicle assembly agreements earlier this year, is planning a RM100 million manufacturing hub for internal combustion engine (ICE) vehicles and electric vehicles (EVs) that it will build in several phases at the Hicom Pegoh Industrial Park in Melaka.

The first is an eight-year vehicle assembly agreement it secured from Great Wall Motor Sales Malaysia Sdn Bhd (GWM) for the production and assembly of GWM vehicles in Malaysia.

The second is a 10-year vehicle assembly cooperation agreement with BAIC International Development Co Ltd that it secured in April for the local production of BAIC’s BJ40P and X55II sport utility vehicles (SUVs), future right-hand drive (RHD) ICE vehicles and EVs, as well as for the joint development of BAIC-branded RHD EVs to cater to the Malaysian and other Southeast Asian RHD markets.

Both agreements were secured via its wholly owned indirect subsidiary PEPS-JV (Melaka) Sdn Bhd.

Upon completion, the first phase of the Melaka manufacturing hub will have an annual production capacity of 12,000 vehicles with two shifts daily, said EPMB.

EPMB shares closed at 61 sen on Wednesday, valuing the group at RM134.37 million. The counter had lost 19.74% of its value so far this year.

Bermaz Auto closed at RM2.37 per share, giving the group a market capitalisation of RM2.78 billion, and is little changed year to date.