RUBBEREX Corporation (M) Bhd plans to utilise the proceeds of RM31 mil from its proposed private placement for capital expenditure to expand production lines for nitrile disposable gloves and defray the estimated expenses of the corporate exercise.
The small-cap glove maker, in a filing with Bursa Malaysia, said the proposed private placement will enable it to raise the necessary funds to part finance the capital expenditure required.
“The board believes that the increase in nitrile disposable gloves production lines will contribute positively to the future earnings of Rubberex Group,” it said.
The company has proposed a private placement of 25.21 million new ordinary shares of Rubberex, representing 10% of the total issued shares.
The board believed that the proposed private placement is the most appropriate avenue to raise funds for Rubberex, allowing it to raise the proceeds expeditiously and cost effectively compared with other fund raising exercises involving pro-rata issuance of securities such as rights issue.
It would also reduce partially interest expenses that would otherwise be incurred by the group if it were to fund the remaining amount of the revised expansion cost of RM32.4 million via bank borrowings and strengthen the financial position and capital base of the company.
“As the proposed private placement is expected to be completed by the third quarter of 2020, it is not expected to have a material effect on the earnings of Rubberex group for the financial year ending Dec 31, 2020.
“Barring any unforeseen circumstances and subject to all the requisite approvals being obtained, the proposed private placement is expected to be completed by the third quarter of 2020,” it said. – May 5, 2020, Bernma.
