Box-Pak to raise RM120 million via rights issue

PETALING JAYA: Box-Pak (Malaysia) Bhd, which reported a 81.1% plunge in second-quarter net profit due to higher operating cost and foreign currency translation losses, proposed a renounceable rights issue exercise to raise up to RM120 million.
Box-Pak told Bursa Malaysia that the entitlement basis can only be determined upon the fixing of the rights issue price.
Of the RM120 million to be raised, RM30 million is intended for business expansion in Malaysia; RM50 million for Vietnam operations, and RM39.1 million for the repayment of short term bank borrowings and working capital.
Box-Pak’s net earnings fell 81.1% to RM769,000 for the second quarter ended June 30, 2016 against RM4.07 million in the previous corresponding period.
Revenue for the quarter under review, however, expanded 25.9% from RM97.81 million to RM123.1 million, thanks to contribution from Vietnam operations.
The group said the volatility in foreign currency exchange rate poses a challenge for it due to its exposure arising from its overseas operations and material cost which are denominated in US dollar.
It noted that the rise in the minimum wage, which took effect from July 1, 2016, has the impact of increasing operating cost.
“Competition in the packaging industry in Malaysia and Vietnam has remained stiff and in order to maintain its market share, the group will need to constantly review its price structure,” it added.