KUALA LUMPUR (Sept 12): WTEC Group Bhd, a foam and fabric products maker, filed for an initial public offering (IPO) on the ACE Market to raise funds for acquisition of a new, larger factory in Selangor.

The proposed IPO involves a public issue of 90.17 million new shares and an offer for sale of 43.2 million existing shares at a price to be determined later, according to its draft prospectus. All in all, the listing would offer investors up to a 28% stake in the company.

“We plan to establish the new factory by purchasing an existing factory in Kajang or Semenyih,” WTEC said. “We intend to consolidate some of the existing manufacturing operations to the new factory, as well as install new machinery and equipment that we plan to purchase there.”

WTEC mainly manufactures foam products made from plastics with air-filled pockets used in industries from automotive to electronics. The company also makes non-woven fabric parts used as padding for armrests in cars and lining for car seats.

Last year, the Selangor-based company made a net profit of RM9.37 million on revenue of RM50.86 million to clients including APM Automotive Holdings Bhd (KL:APM) and Toyota Boshoku UMW Sdn Bhd, a joint venture between Toyota Boshoku Corp in Japan and UMW Holdings Bhd now under Sime Darby Bhd (KL:SIME).

Under the public issue, WTEC is allocating 24 million new shares to the public and 9.6 million shares to eligible persons. The company is also making 56.57 million new shares available through private placement to approved Bumiputera investors.

Proceeds from the public issue will also be used to buy new machinery and equipment, including adhesive lamination line and sewing machines, as well as to fund sales and marketing expenses, meet working capital requirements, and defray estimated listing expenses.

Meanwhile, any proceeds from the offer for sale through private placement to approved Bumiputera and select investors will accrue entirely to selling shareholders managing director and co-founder Tan Kok Kheng, executive director Tiow See Yen and Wansern Marketing Sdn Bhd.

Wansern Marketing is equally owned by brothers Eu Tian Chiek, Eu Tiong Nam, and Eu Tiong Lai as well as their brother-in-law Kam Tang Lim.

Alliance Islamic Bank is the IPO’s principal adviser, sponsor, sole underwriter and placement agent.