Southern Cable’s IPO entails a public issue of 209.3 million new shares and an offer for sale of 20 million existing shares at an issue price of 34 sen per share.
From the total proceeds raised, the group has allocated RM30 million for capital expenditure and expansion. Of this, RM18.5 million is to purchase and upgrade machinery and equipment, RM7.5 million is to construct new factories and RM4 million is to fund the purchase and installation of an enterprise resource planning (ERP) information technology system.
A sum of RM27.5 million will be set aside as working capital, RM9.2 million to repay bank loans and RM4.5 million to defray estimated listing expenses.
The group intends to implement a dividend policy of distributing a minimum of 15% of its annual net profit to shareholders.
Southern Cable manufactures cables and wires that are used for power distribution and transmission, communication as well as control and instrumentation applications. It services various industry sectors such as power distribution and transmission, telecommunications, building and construction, infrastructure, manufacturing and processing industries including oil and gas processing and petrochemical plants.
Southern Cable managing director Tung Eng Hai said the construction of the two factories near its current production plants in Kuala Ketil, Kedah, will increase its total built-up area from more than 416,000 square feet to more than 480,000 square feet.
“Together with the new machines and upgrade of the current factory, this will expand our total production capacity by 9,050km of cables and wires to 40,130km of cables and wires per year by the first half of 2022.
“To support the higher production capacity, we are setting up a new polyvinyl chloride (PVC) compound production plant next to our current factory in Sungai Petani, Kedah, by first half of 2022. With this plant, our manufacturing capacity of PVC compound material is targeted to increase by 4,200 tonnes to 12,000 tonnes per year,” he said.
MIDF Amanah Investment Bank Bhd is the principal adviser, sponsor, sole underwriter and placement agent for the IPO exercise.
Source: The Sun Daily