QL Resources bulk of rights proceeds to repay bank loans

SHAH ALAM (Jan 27, 2014): QL Resources Bhd intends to use nearly 70% of the RM300 million it plans to raise from the issuance of rights share to settle its debt, said its managing director Dr Chia Song Kun (pix).
Chia said the company will put aside RM220 million from the exercise to repay bank loans that will help improve its net gearing ratio to 0.48 times and 0.39 times from 0.77 times as at Mach 31, 2012.
"The proposed rights issue will increase our company's capital base and reduce the group's gearing, which in turn will strengthen the financial position of the QL Group," he told reporters after the company's EGM here Friday.
As of Oct 31, 2013, Chia said the total bank borrowings of QL Group stood at about RM846.52 million.
"The balance RM70 million will be used for the capital expenditure of the marine and livestock division," he told reporters after the company's extraordinary general meeting here last Friday.
QL Resources aims to raise a gross proceeds of up to RM299.5 million from the issuance of its 166.4 million rights shares at RM1.80 per share.
"The balance RM70 million will be used for the capital expenditure of the marine and livestock division," he told reporters after the company's extraordinary general meeting here last Friday.
QL Resources is a diversified investment holding company engaged in integrated livestock farming, marine products manufacturing and oil palm plantations.
About half of the RM70 million will be used to expand the group's existing poultry farms in Malaysia, Indonesia and Vietnam, that are operating at near to full or full capacity, producing a total of 40 million day old chicks annually and 4 million eggs daily.
With the expansion, the overall total production capacity is also expected to increase to a maximum output of about 50 million day old chicks annually and 5 million eggs daily within the next 18 months.
To cater for the growing scale of QL Group's poultry farms, he said the company plans to build a new feedmill in Bekasi, Indonesia, which has an estimated built-up area about 10,900 sq meters.
The feedmill, which is expected to be completed by the fourth quarter of the financial year ending March 31 2015, will have a production capacity of 30,000 metric tonnes of mesh feed per month, he said.
Chia said both projects are estimated to cost about RM110 million, of which RM35 million will be satisfied via proceeds raised from the proposed rights issue while the balance via internally generated funds and bank borrowings.
He said the balance of RM35 million of the proceeds will be used for the construction of its frozen surimi-based production plant in Hutan Melintang in Perak.
The new plant, he said, will provide QL Group with an additional production capacity of 15,000 metric tonnes per annum. Its existing manufacturing facility is currently operating at a full capacity.
Chia said part of the proceed will be used for the development of new marine prawn aquaculture farm in Kudat, Sabah, which marks its first investment and venture into shrimp farming.