KUALA LUMPUR: Leform Bhd, en route for a listing on Bursa Malaysia’s ACE Market on Nov 22, expects to raise RM71.5 million from its initial public offering (IPO).
Executive director and group adviser Robert Phang Yew Cheong said the company, principally involved in the manufacturing of and trading in steel products, will use RM30 million of the IPO proceeds to construct a new headquarters, warehouse storage facilities and workers’ accommodation.
Another RM21.9 million will be used for working capital while RM14.4 million will go towards repayment of bank borrowings and RM5.2 million for listing expenses.
“We are allocating the lion’s share of RM30 million to construct new facilities to cater to the anticipated increase in orders for steel pipes and flat steel products,” Phang briefed the media after launching the company’s prospectus here today.
He said doubling their storage space capacity will enable them to raise production volume.
Managing director Law Kok Thye said the proposed new facility will be a one-stop centre and will give them higher operational efficiency.
“In addition, our storage capacity will increase by 93.2 per cent, allowing us to cater for the anticipated increase in production volume and widen our product range,” Law said. The recent fall in global steel prices is a challenge but Leform remains upbeat about its propsects because steel consumption is expected to rise due to a recovery in the manufacturing and construction industries.
Underpinned by the encouraging prospects of their end-user industries, Leform’s new listing status shall accelerate growth momentum to deliver value for all stakeholders.
Phang said with the construction sector recovery being the government’s focal point in its policy-making direction, the emergence of mega projects and other initiatives are expected to boost demand for steel products.
He said in tandem with the rising demand for automotive vehicles and locally-manufactured furniture, demand for steel products is projected to increase alongside the growth of these end-user industries.
Upon listing, the company will have a market capitalisation of RM340.6 million based on enlarged share capital of 1.48 billion shares.
The company’s IPO will be done via the issuance of 311 million new ordinary shares, representing 21 per cent of the enlarged share capital of Leform at an issue price of 23 sen per share.
Among the public issue of 311 million new shares, 74.1 million new shares will be made available for the Malaysian public; 29.6 million new shares for eligible directors and employees of the group and those who have contributed to the group’s success; 22.2 million new shares by way of private placement to institutional and/or selected investors; and 185.1 million new shares by way of private placement to identified Bumiputera investors approved by the International Trade and Industry Ministry.
Leform will endeavour to maintain a dividend payout ratio of not less than 20 per cent of its annual audited net earnings.
Following the prospectus launch, applications for the public issue are open from today and will close on Nov 11 at 5.00 pm.
MIDF Amanah Investment Bank Bhd is the principal adviser, sponsor, sole underwriter and sole placement agent for Leform’s IPO exercise. - Bernama