Rex Industry proposes 1-for-3 rights issue with warrants to raise up to RM16.44 mil

Rex Industry proposes 1-for-3 rights issue with warrants to raise up to RM16.44 mil
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KUALA LUMPUR (Aug 1): Rex Industry Bhd has proposed to undertake a renounceable rights issue of up to 164.42 million new shares at the issue price of 10 sen apiece, coupled with free warrants to raise up to RM16.44 million to expand its beverage business.

The canned food and beverage (F&B) manufacturer said the proposed exercise entails the issuance of one rights share for every three existing Rex shares held, together with 54.81 million free detachable warrants in Rex on the basis of one warrant for every three rights shares subscribed by entitled shareholders.

The company said up to RM10 million from the proceeds would be used to install additional beverage production lines to expand its offering of smaller-sized beverage servings due to the increasing demand for such products, RM5.88 million for working capital and the remaining RM560,000 for estimated expenses related to the capital exercise.

“The new additional beverage production lines are expected to increase our production capacity by 3.43 million cartons per year, with an estimated output of 2.75 million cartons per year,” it said in a stock exchange filing.

Currently, the group is in the midst of deliberating on the location of the factory to install the additional beverage production lines, which could take place at its existing production facility in Batu Pahat, Johor, or it will rent or acquire a new factory at a different location in Malaysia.

The proposed rights issue with warrants exercise is expected to be completed in the third quarter of 2022.

“Moving forward, the local F&B industry is expected to maintain positive growth in 2022, in (line) with the recovery of the local economy.

“However, it should be noted that global food price inflation that arises from global supply chain disruption and labour shortage, may weigh on domestic demand and consumers' future spending on food and beverages,” it said.