Hong Seng Consolidated has informed that it will be terminating the land sub-for its subsidiary to build and operate a nitrile butadiene latex manufacturing plant.
The agreement details Penang Port Sdn Bhd sub-leasing an industrial land located at Prai Bulk Cargot Terminal measuring 12,140 square meter (approximately 3 acres) in area for a period of 20 years for a total rental payment of RM8,529,564.
Initially, the group intends to build and operate a nitrile butadiene latex manufacturing plant in Kedah Rubber City. NBL is the raw material used to produce nitrile gloves. The group via its subsidiary HS Petchem intended to also build storage tank facilities to store feedstocks such as Butadine and Acrylonitrile petrochemicals which are the raw materials required for the manufacturing of NBL and providing logistics services for the supply of feedstocks to the NBL manufacturers on the said land
However, citing the current economic climate, the group said it made a strategic decision to suspend the development of the KRC NBL Project in view of various factors including project requirements, funding requirements, and external factors beyond its control, such as the current weak market sentiment regarding the glove industry, capital raising needs and inflows of private and foreign investments.
In view of this the board had decided to renegotiate with Northern Corridor Implementation Authority on the earlier terms of the agreement in relation to the KRC NBL Project and explore alternative utilisation of the land. It had also decided to terminate the sub-lease of the Land with PPSB.
The group has confirmed that it received a Letter of Termination from PPSB dated 11 September 2023 to terminate the Letter of Offer and the underlying sub-lease. HS Petchem had paid a refundable security deposit of RM61,914.00 and the first initial payment of the sublease consideration of RM111,445.20 upon execution of the Letter of Offer.
