KUALA LUMPUR (March 15): Volcano Bhd has proposed to raise up to RM42.77 million via a private placement, mainly to fund its expansion plan.

The group said up to 49.50 million new shares, representing 30% of Volcano’s current share base of 165 million shares, will be issued to independent third party investors to be identified later.

The placement shares will be priced at not more than a 10% discount to Volcano shares’ five-day volume weighted average market price, said the nameplate and plastic injection moulded parts maker in a bourse filing.
 
Based on an illustrative issue price of 86.40 sen a share, the group may raise up to RM42.77 million, of which RM38 million will be used to fund the construction of new factories in Penang and Rayong in Thailand. Another RM3.33 million will go towards general working capital, with the remaining proceeds to be used for expenses of the placement exercise.

Volcano said the estimated cost for the construction of the  new factory in Penang is RM23.8 million, while the one in Thailand is expected to cost RM33.51 million.

Volcano intends to expand its manufacturing space on the Penang land by constructing a new three-storey factory and a single-storey basement car park. The latest expansion will add an additional built-up area of 113,800 sq ft to its existing floor space — over five times bigger than its existing factory premises with a built-up area of 20,760 sq ft.

For the factory in Thailand, Volcano said it intends to construct a two-storey office, a single-storey factory and a single-storey warehouse. The estimated built-up area of the new factory would be 108,694 sq ft.  

The group aims to complete the construction works for both factories by 2025.

Volcano was in the news on Monday after it received an unusual market activity (UMA) query from Bursa Malaysia Securities, after its shares surged 23.86% or 21 sen to at RM1.09 on the same day.  

In response to the query, Volcano said it is assessing an equity fundraising exercise, and will make an announcement on the matter later.

Shares in Volcano closed one sen or 0.97% lower at RM1.02 on Wednesday, giving the group a market capitalisation of RM168 million. Since the beginning of this year, the stock has more than doubled from 48 sen.