KUALA LUMPUR (Aug 18): After completing two rounds of private placement to fund its face mask business venture, Komarkcorp Bhd now plans to raise up to RM81.78 million — 128% of its market value of RM64 million — through a rights issue.

The group, which is involved in printing labels and packaging solutions, ventured into making face masks and personal protection equipment (PPE) in June last year.

It successfully raised RM59.21 million through a private placement exercise in December to be used to establish up to 30 production lines for the face mask manufacturing business.

The group completed another private placement on May 31, raising proceeds of RM12.93 million, which were intended to be utilised for the expansion of production capacity for the face mask business.

Currently, Komarkcorp is operating 23 production lines of three-ply face masks and one production line for respirator face masks.

It intends to expand its production capacity by setting up another 79 production lines for three-ply face masks and 25 production lines for respirator face masks. As a result, it would have 128 lines production lines with annual production capacity of 1.22 billion units of three-ply face masks and 312 million units of respirator face masks

In a bourse filing today, Komarkcorp said it expects to raise up to RM81.78 million via the proposed rights issue, based on an illustrative issue price of 10 sen per right share under the maximum case scenario.

This exercise entails the issuance of up to 817.82 million rights shares and up to 272.61 million free detachable warrants, on the basis of three rights shares and one warrant for every three shares held.

Komarkcorp said RM46 million of the proceeds will go towards the expansion of its manufacturing business, including RM22 million for the face mask business, RM12 million for replacement and upgrade machineries for the labelling business, RM7 million for refurbishment and renovation of factories, and RM5 million for installation and commissioning of the face mask production lines.

The group said it also plans to set aside another RM5 million for new product development to keep pace with the demand and development in face masks, and RM15 million to finance the acquisition or investment in any suitable complementary business, including the face mask and label industry.

The group expects the rights issue with warrants to be completed by the fourth quarter this year.

Komarkcorp’s share price closed 0.5 sen or 4.35% lower at 11 sen today, giving it a market capitalisation of RM64 million.