KUALA LUMPUR (July 20) Careplus Group Bhd has proposed to place out new shares to third party investors to raise RM18.85 million to finance the expansion of its production facilities.
 
The glove manufacturer said the private placement will involve up to 48.33 million shares or 10% of its total number of issued shares.
 
The identity of the third party investors and issue price will be determined later, it said in a filing with Bursa Malaysia.
 
Careplus said the issue price of each tranche of the placement shares will be based on the volume weighted average market price (VWAMP) of Careplus shares for the five market days immediately prior to the price-fixing date, with a discount of not more than 10%.
 
For illustrative purposes, the five-day VWAMP of Careplus shares up to July 12 is 41.31 sen.
 
"The illustrative issue price of 39 sen per placement share represents a discount of approximately 5.59% to the five-day VWAMP of Careplus shares," the company said.
 
Out of the expected RM18.85 million proceeds, RM8 million has been earmarked for construction of a new building in one of the group’s existing factories in Senawang, Negeri Sembilan. Construction is expected to begin in August.
 
Another RM10.75 million of the proceeds will be used to partially fund three additional double-former production lines, which will be installed in the new building upon its completion in 2018.
 
Upon the full commissioning of the three additional production lines, Careplus’ production capacity is expected to increase from 3.90 billion glove pieces per annum to 4.62 billion.
 
The company expects the private placement to be completed by the third quarter of 2017.
 
Careplus shares closed up 1.5 sen (3.6%) at 43 sen today, giving it a market capitalisation of RM202.97 million.