KUALA LUMPUR: Steelmaker Malaysia Steel Works (KL) Bhd (Masteel) is forming a joint venture (JV) with Belgium's Ion Beam Application SA (IBA SA) group towards strengthening its business in the development of radioisotopes and radiopharmaceuticals products.

In a statement on Wednesday, June 2, Masteel said the JV would be carried out through Bio Molecular Industries Sdn Bhd (BioM), currently its wholly owned subsidiary that is involved in the manufacturing and research and development of radioisotopes and radiopharmaceuticals products for Positron Emission Tomography (PET), a form of nuclear medical imaging.

BioM has been awarded as a "BioNexus Status Company" by Malaysian Biotechnology Corporation Sdn Bhd. IBA SA group develops and markets cutting-edge technologies, pharmaceuticals and custom-made healthcare solutions, especially on cancer diagnosis and therapy.

The company also uses its scientific expertise to engage in industrial sterilisation and ionisation.

Under the terms of a subscription and share sale agreement that was signed between the parties on Wednesday, Masteel said it would lower its shareholding in BioM to 45.34%, while IBA subsidiary IBA Pharma SA would hold the remaining 54.66%.

Pursuant to that, Masteel will sell to IBA Pharma 5.11 million BioM shares for RM1,000 and IBA Pharma will further subscribe for five million BioM shares.

Masteel said the proposed partnership was part of the group's efforts to strengthen its business prospect, where IBA SA could "contribute their considerable technical, manufacturing, research and development knowledge's and financial resources to bring the radiopharmaceutical business to its full potential".

It said the move would also absolve Masteel from the guarantee of about RM10 million for the purchase of Cyclotron equipment from IBA SA for BioM.

The agreement will be subject to a few conditions. These include IBA SA obtaining Masteel's unconditional discharge and release from its obligations under the guarantee agreement for RM10 million.

Masteel expects to incur a one-time loss on disposal of about RM5.11 million in the financial year in which the proposed partnership is completed. The expected loss on disposal will reduce its earnings per share by about 2.6 sen. Masteel on Wednesday fell 0.5 sen to 91.5 sen with only 82,000 shares traded.