KUALA LUMPUR (Dec 27): Kuantan Flour Mills Bhd (KFM) has today inked a memorandum of understanding (MoU) with Lotus Essential Sdn Bhd for a contract manufacturing and offtake agreement on the provision of flour milling activities and to consider a strategic investment.

According to a bourse filling today, the MoU will take effect from today for six months.

As part of its proposal to restructure its debt and reconstruct its business, KFM is proposing to carry out an equity fund raising exercise via a rights issue and special issue of its shares, and to cooperate as well as collaborate with Lotus to carry out flour milling activities and trading of flour and food related products, it said.

"The directors and substantial shareholders of the company do not have any interest, direct or indirect, in the said MoU.

"In so far the existing directors and the substantial shareholders are able to ascertain and are aware [that] no person connected to them have any interest, direct or indirect, in the said MoU," it said.

Having taken into consideration all aspects of the MoU, KFM's board of directors opined that the MoU is in the best interest of the company, it added.

Lotus is in the business of import, export and trading of steam coal, corn starch and tapioca starch.

Shares in KFM closed 1.5 sen or 20% higher at nine sen, giving it a market capitalisation of RM5.46 million