EG to raise RM63.9m for acquisitions

SUNGAI PETANI: EG Industries Berhad(EG) is expecting to raise RM63.9 million through a one-for-four renounceable rights issue of redeemable convertible preference shares (RCPS) mainly to acquire new businesses.
A big bulk of the proceeds amounting to RM23.6 million will be earmarked for acquisition of new businesses and assets, mainly small and medium-sized companies locally or in countries such as Singapore, Thailand and China, and acquire assets with ready capacities to supplement its operations.
EG will be issuing some 67.3 million 1-for-4 renounceable rights issue of RCPS of RM0.95 per unit attached with a bonus of one share for every RCPS subscribed.
Group CEO and executive director of EG Industries Berhad Alex Kang said “apart from strengthening our capital base to appropriately indicate the group’s larger scale of integrated operations, these corporate exercises accord us additional funding to propel the group forward”.
Besides that, Kang said acquisitions will be instrumental as a customer retention strategy while also complementing its competency in the Electronic Manufacturing Services (EMS) industry.
With this, the group’s enlarged issued and paid-up share capital would increase to RM201.9 million comprising 403.8 million shares of RM0.50 each from 211.6 million shares, assuming that all outstanding 57.6 million warrants are exercised into shares.
While RM2.1 million would be used to defray expenses for the corporate exercises, another RM15 million of the proceeds collected will be allocated for purchases and upgrading of equipment and machinery, RM 10 million will go for raw material purchases, RM2.4 million allotted for research and development and acquisition of intellectual property (IP) and RM10 million will be used to repay borrowings, and RM0.8 million for working capital purposes.
EG provides services in original equipment manufacturing and original design manufacturing with full turnkey solutions for completed final products assembly (box-build), printed circuit board assembly and modular components assembly, with manufacturing plants in Kedah and Thailand.