Jerasia to expand foray in PPE into gloves, plans private placement, rights issue with warrants
29 Jan 2021
Jerasia Capital Bhd is expanding its foray in the personal protection equipment (PPE) by venturing into the manufacturing and trading of gloves to further enhance its revenue.
Jerasia and its subsidiaries are principally involved in wholesaling, retailing and manufacturing and exporting of fashion apparels and accessories.
Its group managing director Pronob Sen Gupta said the expansion is synergistic for the company, which had on July 3, 2020, expanded its product portfolio into developing, producing and supplying PPE.
“Since the outbreak of the Covid-19 pandemic, the demand for PPE to curb the pandemic has boosted the demand for gloves.
“On the other hand, our wholesaling, retailing and manufacturing and exporting of fashion apparels and accessories had been affected by the Movement Control Order (MCO).
“The glove business venture will allow us to take advantage of favourable long-term prospects for the glove industry and capitalise on the burgeoning demand for gloves while making the most out of the opportunities created by the Covid-19 pandemic,” he said in a statement today.
Under the proposal, the company will undertake a private placement and rights issue with warrants to fund the glove manufacturing business.
Under the corporate exercise, Jerasia will enter into a conditional offtake agreement with Golden Global Trading & Healthcare Sdn Bhd for the supply of gloves.
Golden Global’s principal activity is in the business of original equipment manufacturing, trading, marketing of nitrile and latex gloves.
It is the registered brand owner for gloves known as Golden Care.
Besides that, Jerasia said it planned to invest RM146 million to acquire, install and commission up to 10 dipping lines in stages over the course of 12 months to manufacture latex and nitrile gloves.
This will be financed via the proceeds from the private placement and rights issue with warrants.
These 10 lines are expected to yield a production capacity of approximately 8.4 million pieces of gloves per day.
Jerasia plans to supply a minimum 72 million boxes of latex and nitrile examination gloves within three years with a monthly minimum volume commitment of two million boxes throughout the three years period.
The company has identified and planned to acquire a piece of approximately three acres freehold land in Negeri Sembilan to facilities the venture into the glove business.
Meanwhile, based on the indicative issue price of 35 sen per rights share, the company expects to raise RM228 million and RM261.3 million from the rights issue with warrants.
“Jerasia intends to utilise up to RM146 million to acquire, install and commission up to 10 glove dipping lines to manufacture latex and nitrile gloves.
“It also intends to utilise up to RM89.9 million of the proceeds to repay part of the company’s existing bank borrowings, which amounted to approximately RM184.4 million as at September 30, 2020.
“The bank borrowings were mainly trade facilities and revolving credits for working capital purposes,” it said.