KUALA LUMPUR: LKL International Bhd has obtained its shareholders' approval to undertake a private placement and an employees' share option scheme (ESOS).
The medical/healthcare equipment provider said the private placement, proposed on July 17, entails the issuance of up to 85.8 million shares amounting to not more than 20 per cent of its total ordinary shares, at an indicative price of RM1.10 each.
"With up to RM94.3 million projected to be raised, the group plans to allocate RM26.5 million for capital expenditure (capex) and expansion plans.
"The majority of capex is for the RM13.0 million purchase and setting up of two units of adjoining new factory buildings near the group's current head office and manufacturing facilities," LKL said in a statement today.
The new factory buildings will be used for the manufacturing and assembly of medical/healthcare beds, peripherals and accessories, production office, and warehouse for finished goods.
LKL said it would invest RM9.5 million of the proceeds to build a three-storey steel structure extension across existing factory buildings and install a conveyor line to automate its epoxy powder coating process.
Another RM4.0 million of the capex would be used to buy a variety of new machineries, it added.
After taking into account funds raised for capex, the remaining private placement proceeds will be used to fund RM55.3 million of working capital requirements.
This includes staff-related expenses and defrayment of other operational expenses, RM6.0 million for future investments or projects, RM5.6 million for the repayment of bank borrowings and RM1.0 million to defray estimated private placement expenses.
LKL managing director Lim Kon Lian said Covid-19 had prompted heightened urgency for healthcare service providers to increase capacities and better equip their capabilities.
Lim said the group was witnessing greater demand for medical beds from hospitals and medical centres, with orders in hand of more than 750 beds which would be delivered over the next fourteen months.
"With strong demand within the healthcare sector expected to persist, our capex and expansion plans are timely to enhance manufacturing capacities and capabilities to fulfil this uptrend."
The proposed ESOS, meanwhile, will encompass the issuance of up to 15 per cent of the enlarged total number of issued ordinary shares and private placement shares.
The ESOS will be carried out and completed upon the expected completion of the private placement exercise in the first half of 2021.