VS Industry's OEM and ODM operations
KUALA LUMPUR: VS Industry Bhd
is subscribing for 200.02 million rights shares of its Hong Kong-listed VS International Group Ltd (VSIG) at 23 Hong Kong cents or 12.6 sen a share for a total of RM25.2mil.
VS Industry, which is an integrated electronics manufacturing services (EMS), said on Thursday the right shares accounted for 43.49% of the 497.88 million of the total rights shares issued.
It said the rights shares were provisionally allotted to it under the rights issue wherein it would underwrite all the right shares not subscribed.
“The subscription to the rights issue is funded entirely via borrowing from financial institution,” it said.
Meanwhile, VS International Group (VSIG), in a statement to the Hong Kong Exchange, said the rights issue was to cope with the increasing business needs, such as expanding its production capacity and storage capacity; production efficiency to negate some of the impacts from rising wages.
The estimated net proceeds of the rights issue will be not less than HK$102.8mil and not more than HK$111.5mil.
Of the amount, VSIG intends to use HK$35mil to repay short term bank borrowing, previously drawn to fund new warehouses and general working capital, and HK$23mil for buying automated equipment and HK$12mil for hiugh tonnage injection machinery.
VSIG's core activities are the manufacturing and sale of plastic moulded products and parts, assembling of electronic products and moulds design and fabrication.
VSIG said for the six months ended Jan 31, 2017, the group has experienced significant increase in both revenue and profit, thanks to a large manufacturing contract signed in mid-late 2016 with an existing customer.
“The directors are of the view that the group will be able to continue to attract new customers, while expanding the current business relationship with existing customers due to the growing demand of home appliances within China.
“The directors consider that the growing demand is mainly driven by the increasing population and GDP per capita. In addition, certain types of home appliances, such as airpurifier or water-filter, are expected to experience even more growth as the general public is becoming more health-conscious. Recently, the group has been in talks for multiple large potential contracts from new customers,” it said.
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