KUALA LUMPUR: Kanger International Bhd, which makes bamboo wood products, is setting up a glove manufacturing plant in Ijok, Selangor for about RM77 million.
Kanger told Bursa Malaysia today it has incorporated a wholly-owned subsidiary, Kanger Glove Manufacturing Sdn Bhd, which will acquire around five acres in Ijok for RM6.8 million.
Kanger Glove would spend RM70 million to build the plant and install up to eight production lines to produce medical, surgical and/or nitrile gloves, Kanger said in a filing with Bursa.
The stock closed two sen lower at 26.5 sen today. Some 43.6 million shares changed hands.
Kanger said it had on August 13, entered into heads of agreement with Dubai-based Constellation Holdings Ltd (CHL), which would acquire a 49 per cent equity in Kanger Glove for RM49,000.
Kanger announced on Tuesday it had received a formal expression of interest letter (EOI), dated August 9, from CHL to set up the medical examination gloves operations in Malaysia.
The EOI expresses CHL's intention to collaborate with KIB through several options, which include direct equity participation by forming a joint-venture entity, and/or indirect equity holding in the glove manufacturing operations via investment into Kanger through a private placement exercise.
Kanger said a substantial proportion of the total output of the production would be sold to CHL.
CHL is the appointed procurement agency for personal protective equipment, medical equipment and supplies for the Ministry of Health and Prevention of the United Arab Emirates, and other countries in Middle East.
The remaining output would be reserved to develop other market channels in Asia and Europe, it said.
"All investment cost as well as the profit and loss of Kanger Glove shall be borne and/or distributed in accordance to the equities of the respective party in the company.
"CHL has the right to allocate part of its 49 per cent equity in Kangar Glove to other parties or investors it deems appropriate, subject to KIB's prior agreement on each party," Kanger said.
Kanger, which has completed the development of AutoCity and Kyriad Hotel, located within the Ganzhou Economic and Technological Development Zone in Ganzhou city, China said the land acquisition was expected to be completed within 45 days from the agreement with CHL.
In March, Kanger had secured 10-year lease agreements for AutoCity and Kyriad Hotel.
The initial rental income per year for the two buildings collectively is RM11.1 million, and is subject to scheduled rent increases.