KUALA LUMPUR (April 12): Packaging solution provider and automatic labeling machine manufacturer Komarkcorp Bhd plans to raise RM23.07 million via a private placement to expand its face mask manufacturing business.
In a bourse filing today, the group announced it would be issuing 96.22 million new shares or 20% of its existing share base to independent third party investors.
Based on its illustrative issue price of 24 sen apiece, the group would be raising RM23.07 million, of which RM22.24 million would be deployed for the expansion of its face mask manufacturing business and the rest to defray the expenses associated with the private placement.
Komarkcorp noted that it has installed and is currently operating six production lines for three-ply face masks and one production line for KN96 face masks.
It has placed orders and is in the midst of finalising the purchase of machinery for an additional 19 production lines for three-ply face masks and four production lines for KN95 face mask – which are expected to be installed and operational by the second quarter of the year.
As a result, it would have a total of 25 three-ply face mask production lines and five KN95 production lines. It also plans to further expand its production capacity by setting up 75 production lines for three-ply face masks and 10 production lines for KN95 face masks over the next 18 months.
Consequently, it would have a total of 100 production lines for three-ply face masks and 15 production lines for KN95 face masks, an annual production capacity of 1.8 billion units of three-ply face masks and 180 million units of KN95 face masks.
The company remarked that its face mask manufacturing operations are currently housed it its existing factory cum headquarters in Balakong, which has a built-up area of 150,000 sq ft. Of this area, 50,000 sq ft has been allocated for the manufacture of face masks.
“To house a total of 115 production lines, the group will need to acquire another factory building. To this end, the group intends to acquire a new factory building with a targeted built-up area of approximately 80,000 sq ft, at a targeted price of RM20.00 million.
“A factory of this size is estimated to be able to house up to 80 face masks production lines, thus catering for any potential future expansion of the face masks business. At this juncture, the group is looking to acquire a factory close to its Balakong factory to centralise its supply chain as much as possible,” it said.
This is not the first time that Komarkcorp has done a private placement for its rubber glove business. On Dec 28, 2020, it announced that it was raising RM59.21 million via a private placement of 61.68 million shares. In this placement, RM17.90 million was raised as an investment for its face mask business. It has used RM5.78 million of the proceeds earmarked for the face mask production.
As a result of today’s proposed placement, its share base would increase to 577.37 million shares, from 481.13 million shares.
The placement is expected to be completed by the second quarter of the year, with M&A Securities serving as the principal adviser and placement agent.
Shares in Komarkcorp closed 2.08% or half a sen lower at 23.5 sen today, valuing it at RM113.07 million. It saw 15.18 million shares done.