KUALA LUMPUR (June 17): LKL International Bhd has proposed to undertake a renounceable rights issue with free warrants to raise up to RM58.3 million to fund its diversification into the pharmacy business.

The hospital and medical furniture manufacturer is also planning a share consolidation exercise by consolidating every 10 existing shares into one share.

In a bourse filing on Friday (June 17), said the rights issue with warrants entails the issuance of three rights shares and two warrants for every one consolidated share.

Based on an illustrative price of 20 sen per rights share — a discount of approximately 30.92% to the theoretical ex-all price of 28.95 sen — LKL expects to raise up to RM58.296 million.

Of the proceeds raised, RM57.2 million has been earmarked for the expansion of its pharmacy business, while the remaining RM1.1 million will be for the estimated expenses of the exercise.

LKL explained that the venture into the pharmacy business is to leverage on increasing health and wellness awareness amongst consumers, as well as demand for preventive healthcare products.

“Under the pharmacy business, the products to be supplied by the group will include pharmaceutical drugs, dietary supplements, cosmetics and personal care products, medical equipment and medical devices,” it said.

The pharmacy business will complement its existing healthcare business, namely manufacturing of medical beds, peripherals and accessories, said LKL.

“In addition, the group will be able to use the pharmacy outlets as an additional distribution channel to market its existing healthcare-related products,” it added.

LKL has set up its first pharmacy outlet under the “Pharmacy” brand name in Kuala Lumpur. It is looking to open 20 to 30 pharmacy outlets within two years.

The pharmacy business is expected to contribute 25% or more to the group’s earnings.

Shares in LKL International finished unchanged at six sen on Friday, giving it a market capitalisation of RM58.3 million.