KUALA LUMPUR: PDZ Holdings Bhd (PDZ) has signed a memorandum of understanding (MoU) with Protev Asia Ltd to enter the European Union's (EU) medical and military rubber glove market.
Protev director Herbert said EU hospitals and military agencies are interested in stockpiling rubber gloves in preparation for potential future biological threat applications.
"With Protev being a reputable procurement and project management company, together with PDZ, we are going to tap into these niche premium markets in the EU," he said in a statement.
Since the outbreak of the Covid-19 pandemic, the demand for personal protective equipment to curb the pandemic has boosted the demand for medical gloves.
While many countries globally have rolled out vaccines to control the Covid-19 pandemic, the global demand for rubber gloves is expected to remain high.
PDZ executive director cum chief executive officer Datuk Tan Chor How Christopher said under the company's diversification initiative into this lucrative rubber glove industry, its plans to install and commission up to eight double former glove-dipping lines in phases.
"This is to focus on manufacturing medical-grade nitrile gloves, which is expected to yield a total production capacity of around 1.94 billion pieces per annum with full operation within 36 months.
"We expect a return on equity of at least approximately 10 per cent," said Tan.
Meanwhile, Tan said the company would partly fund the diversification initiative with RM19.9 million reallocation from funds raised in the previous rights issue.
This will be coupled with the RM56.0 million raised from issuing 400.25 million new shares and 133.4 million free warrants (PDZ-WC) under the recent Rights Issue.
"The balance of the capital outlay would be funded by bank borrowings, internally generated funds and future funds raising exercise as when required," he said.
The exercise price for the PDZ-WC is 16 sen per warrant payable within the next three years for every one new share.
PDZ intends to recruit up to 152 employees to undertake various roles for the gloves business.
In terms of target markets, given PDZ's collaboration with its German partner, PDZ intends to focus on the EU market while also serving other countries with high Covid-19 infection rates, such as the United States, Africa, South America and India.