Industrial automation outfit AT Systematization sets up rubber glove plant
10 Aug 2020
ACE Market-listed industrial automation system and machinery designer and manufacturer AT Systematization Bhd (ATS), which is venturing into the rubber glove industry, is commissioning six glove dipping lines for its new factory.
According to a bourse filing, the group’s wholly-owned subsidiary AT Glove Engineering Sdn Bhd (AGESB) entered into a supply contract with Ripcol Engineering Sdn Bhd (RESB). This contract would see RESB act as AGESB’s contractor to design, fabricate, instal, test and commission six rubber glove production lines.
RESB would set up one single former dipping line and five double former dipping lines.
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Setting up the six lines would cost AGESB some RM36.15 million. In total, AGESB would see 928 million pieces of rubber gloves per year from the six lines — 103 million pieces from the single former dipping line and 825 million pieces from the double former dipping lines.
It should be noted that the group did not disclose when production would begin, but said that the six lines would be installed in stages, with the single former dipping line to be commissioned by Nov 30 this year.
The fifth double dipping former line is expected to be installed and commissioned by April next year.
The group noted that the move falls in line with its plan to venture into the glove business via its acquisition of rubber glove manufacturer Pearl Glove (Malaysia) Sdn Bhd, the manufacturing and selling rubber gloves, with the aim of installing and commissioning up to 20 production lines in 36 months, which is expected to yield a production capacity of over 3.2 billion pieces per annum, as well as design and manufacture machines to manufacture rubber gloves.
That said, this supply contract is conditional upon shareholder approval for the group’s venture into rubber gloves, with a more definitive facility to be put in place within three days from when shareholders register their approval.
The supply agreement will be financed through a combination of internally generated funds, bank borrowings, and proceeds from its outstanding warrants expiring May 17, 2025, employee share option scheme and private placement.
The private placement will entail the placement of up to 795.92 million new ordinary shares in ATS, representing 30% of the total number of issued shares of the company to independent third parties, at an issue price to be determined later.
“The board of directors, after having considered all aspects of the proposed medical glove lines, including but not limited to the contract price and the rationale for the proposed medical glove lines, and after careful deliberation, is of the opinion that the proposed medical glove lines are in the best interest of ATS and of the group,” it said.
ATS said the agreement with RESB is conditional upon getting shareholders’ nod, and a definitive set-up facility agreement will be executed within three days of receiving their approval.
Shares in AT Systematization finished 20% or two sen higher at 12 sen, valuing it at some RM229.25 million. It saw 612.09 million shares done.
Source: The Edge Markets