Friday 29 Mar 2024
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This article first appeared in The Edge Financial Daily, on August 17, 2016.

 

KUALA LUMPUR: Box-Pak (M) Bhd, which posted an 81% fall in its latest quarterly net profit, plans to undertake a rights issue with free detachable warrants to raise up to RM120 million to expand its business in Malaysia and Myanmar, besides repaying short-term loans and to increase its working capital.

In a bourse filing, the manufacturer and distributor of corrugated carton boxes said it is timely to expand its production capacity by 38,400 tonnes per year in Malaysia, due to growing demand here. It also plans to up the capacity of its manufacturing plant that is under construction in Myanmar by about 36,000 tonnes per annum.

It expects to use RM30 million for expansion in Malaysia and RM50 million in Myanmar; it plans to use RM39.1 million for loan repayments and working capital, with the remainder reserved to defray expenses related to proposed corporate exercises.

Box-Pak said the number of rights shares, its entitlement basis and issue price have not been fixed at this juncture. But for illustration, based on 60 million shares in issue as at Aug 5, 2016, it said the capital outlay of a holder of 100 Box-Pak shares is approximately RM199.92. The actual capital outlay for full subscription would depend on the rights entitlement basis and rights issue price.

It has also yet to fix the number of free warrants to be issued, entitlement basis and exercise price of the warrants.

Meanwhile, it is seeking a new mandate from shareholders to allot and issue up to 10% of its issued and paid-up capital, and approval to raise its authorised share capital to RM600 million comprising 600 million shares from RM70 million of 70 million shares.

Separately, Box-Pak said net profit for the second quarter ended June 30, 2016 came in at RM769,000, compared with RM4.06 million a year ago, on higher material and operating costs, foreign currency translation losses, higher finance costs and initial preoperating expenses incurred in Myanmar.

Revenue, however, rose 26% to RM123.09 million from RM97.8 million last year, due to contributions from its Vietnam operations.

On prospects, Box-Pack said foreign exchange volatility poses a challenge to the group, due to its overseas operations, while its material costs are denominated in US dollar. Competition in the packaging industry also remains stiff, so it would need to constantly review its price structure to maintain market share.

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