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  27 August 2008 - HG Metal announces 2nd major collaboration within one month: JV with Malaysia steel pipe manufacturer Amalgamated Industrial Steel

* Principal activity of JV company is to manufacture spiral pipes for the water and construction industries
* JV in line with the Group’s plan to move further upstream into manufacturing wider range of steel products
* The Group will continue to keep a lookout for strategic opportunities

Singapore, 27 Aug 2008 - Mainboard-listed HG Metal Manufacturing Limited (“HG Metal” or “The Group”), one of the largest steel stockists in Singapore and Southeast Asia, is pleased to announce that the Group’s wholly-owned subsidiary HG Metal Manufacturing Sdn Bhd (“HGMMSB”) has entered into a joint venture agreement with Amalgamated Industrial Steel Berhad’s (“AISB”) wholly-owned subsidiary Amalgamated Industrial Marketing Sdn Bhd (“AIMSB”) to establish Nusajaya Steel Sdn Bhd (“NSSB” or “Joint Venture”) in Malaysia.

The Joint Venture is the Group’s second major collaboration with a listed steel company within a month. On 13 August 2008, HG Metal announced the acquisition of 70.28% stake in SGX-Mainboard listed steel mesh producer, BRC Asia Limited (“BRC Asia”) for S$48.1 million.

The Joint Venture is a follow up on the announcement on the memorandum of understanding (“MOU”) signed between HG Metal and AISB, as announced on 29 February 2008. The principle activity of NSSB is to manufacture spiral pipes for the water and construction industries for both the Singapore and Malaysia markets. Approximately 16 acres of land in Nusajaya Industrial Park (3 plots of 5 plots of land previously acquired by HG Metal) will be set aside for the Joint Venture, with construction on the land expected to begin in next year. Production is expected to start in 2010.

 
“A strategic alliance with AISB, who has more than 30 years experience in manufacturing steel pipes, will expand HG Metal’s manufacturing abilities. Coupled with the Group’s networks with international suppliers and customers, we see a lot of potential and synergies in our business operations that could result through this strategic collaboration between our companies. The Joint Venture and the acquisition of BRC Asia earlier in the month are part of HG Metal’s longterm expansion plan to become more vertically integrated in the steel supply chain. These partnerships will widen our product range and enhance our manufacturing capabilities to the steel industry. We are very excited about the immense possibilities with these major collaborations. Moving forward, we will continue to keep a lookout for strategic opportunities to grow our business.”
Mr Wee Piew, CEO of HG Metal
 
The investment for the initial phase is estimated to be about RM20.0 million. The Joint Venture will be 70% held by HGMMSB (and nominees) with the balance 30% held by AIMSB. HG Metal will be funding the Joint Venture with through a combination of internal funds and bank borrowings. The Joint Venture is not expected to have any material effect on Group’s earnings for its current financial
year ending 30 September 2008.


 
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