KUALA LUMPUR (Feb 6): Consumer packaged goods distributor Kim Teck Cheong Consolidated Bhd, which is slated for listing on the ACE Market of Bursa Malaysia, aims to utilise the proceeds from its initial public offering (IPO) to fund its expansion.
According to its draft prospectus, the IPO will comprise the issuance of up to 142 million new shares - 34 million or 6.66% for the public, 16.26 million or 3.19% for its eligible employees, and 91.75 million or 17.98% to selected investors via placement.
The company did not disclose the amount of proceeds it expects to raise from the listing exercise or the percentage breakdown of the utilisation of its proceeds, but said it will allocate a portion of its proceeds for the acquisition of warehouse facilities in Sibu, Miri and Kuching, Sarawak, and the construction of new warehousing facility in Kota Kinabalu, Sabah.
It said the acquisition of warehousing facilities will enable savings of approximately RM288,000 per year on rental expenses.
Kim Teck Cheong will also purchase equipment for the new Kota Kinabalu facility, its two production lines for bakery products in Sabah and a production line for bakery products in Sarawak.
The remainder of its IPO proceeds will be for working capital purposes and to cover its listing expenses.
Kim Teck Cheong is led by Datuk Lau Koh Sing as its managing director, who is also the national vice president of the Malaysia-China Chamber of Commerce.
Going forward, the company aims to establish a new distribution centre in Brunei through the acquisition of an existing distributor of consumer packaged goods for an estimated cost of RM1.54 million.
"In August 2014, we have started negotiations with a potential vendor in Brunei and we are in the process of undertaking an internal due diligence exercise. The proposed acquisition is expected to be completed by the first half of 2015," it said.
Besides that, Kim Teck Cheong will also expand its existing brands by commercialising additional packaged food and beverage products under its "Orie" and "Creamos" brand names, while also expanding its market to Brunei and Sarawak by the second half of 2015.
"The market expansion will be carried out through the appointment of distributors and/or wholesalers at the said locations. We plan to utilise internally generated funds for the market expansion of our own manufactured bakery products," said Kim Teck Cheong.