KUALA LUMPUR: AT Systematization Bhd (ATS) plans to raise up RM63.8 million via a proposed placement of shares to investors as it diversifies into glove manufacturing business.
In a statement today, ATS the funds would be used towards acquiring, instal and commission up to eight glove-dipping lines.
This is expected to yield a combined production capacity of 1.3 billion pieces of gloves per annum.
ATS said it planned to commission up to 20 production lines to manufacture medical grade nitrile examination gloves, with annual production capacity of up to 3.2 billion pieces per annum.
"To expedite the expansion plan and to meet the demand for medical gloves, the group had negotiated and secured a contract with a machine maker for the supply of six gloves-dipping lines," it added..
ATS said the first batch of glove-dipping machines was slated to be delivered and commissioned by November this year.
"Subject to market demand, the group intends to gradually expand its production capacity to up to 20 dipping-lines over the course of 36 months," it said.
In June, ATS announced that it was buying Pearl Glove (Malaysia) Sdn Bhd, which has a contract to produce around 500 million pieces of gloves in the next one year.
ATS, in a filing to Bursa Malaysia, did not disclose the price it was paying but sources said Pearl Glove's contract was valued at about RM100 million.
"ATS is buying PGSB with the intention to double the production capacity beyond 2021.
"ATS is looking at glove manfacturing as the next biggest business. This will be a long term business for the company," said a source.
Pearl Glove, which was incorporated in 2008, has specialty in original equipment manufacturing (OEM) and original design manufacturing (ODM) products.
Meanwhile, ATS said it also planned to venture into the provision of design, engineering and technology works, fabrication as well as installation of machines for the manufacture of gloves and other rubber-related products in the next two to three years.
"As the gloves business is anticipated to contribute 25 per cent or more of the net profits and/or net assets of the group, the company is seeking its shareholders' approval for the diversification of its business activities to include the gloves business.
"Based on the above, the group's venture into the glove business is expected to allow the group to capitalise on a booming segment with favourable long-term prospects," it said.