KUCHING: Sarawak Consolidated Industries Bhd
(SCIB) expects to invest about RM57.57mil in its new precast concrete products’ manufacturing plant project in Demak Laut Industrial Park.
The construction cost of the new plant is estimated at RM38.62mil while another RM18.95mil is needed for the purchase of factory machineries.
To pave way for the project, SCIB is acquiring five industrial leasehold plots measuring about 8.85 ha for RM21.62mil from Sarawak Land & Survey Department.
The company has paid the first and second of the five annual installments for the land, with the remaining balance of RM11.69mil expected to be funded by bank borrowings which it had already secured.
As part of the land sale offer from the Land & Survey Department, SCIB said the company would be exempted from paying the fourth and fifth annual installments as a rebate if it could complete the new manufacturing plant within three years.
The new plant is to relocate the existing factory operations in Pending Industrial Estate in the city centre, and to expand the production capacity of concrete-related products, such as spun piles and reinforced concrete products.
“The new factory, which is expected to have a built-up area of approximately 16,300 sq m, will enable the company to expand its current production capacity to meet the anticipated increase in market demand for concrete-related products.
“This move is in line with the development plans of the Sarawak government over the coming years, which include the construction of public infrastructure projects throughout Sarawak.
“These are expected to include, amongst others, the construction of the Sarawak-Sabah Link Road as well as the upcoming completion of the Sarawak Pan Borneo Highway which is expected to enhance the road network within Sarawak and establish better connectivity to Sabah and Brunei,” SCIB said last Thursday when announcing a corporate exercise to undertake a proposed renounceable rights issue to raise funds to finance the new factory project, pare down bank borrowings and for working capital.
The group’s bank borrowings stood at RM96.82mil.
The proposed rights issue entails the issuance of up to about 763.6 million new ordinary shares together with the same number of free detachable warrants on the basis of one rights share together with one warrant for every existing share held by entitled shareholders.
The illustrative issue price of the rights shares is seven sen each. The fund raising exercise is expected to raise at least RM10mil (minimum scenario) and up to RM53.45mil (maximum scenario).
To meet the minimum subscription level of raising not less than RM10mil, SCIB executive chairman and major shareholder Datuk Chong Loong Men has made an undertaking to subscribe in full his entitlement of rights shares and, if required, additional rights shares not taken up by other entitled shareholders by way of excess rights shares application.
“Any shortfall in the group’s funding requirement for the construction of factory is expected to be met via internally generated funds, bank borrowings and/or future fund raising exercises to be undertaken, if required,” said SCIB.
SCIB has also proposed a share capital reduction of RM110mil of the company’s issued share capital.
The exercise will result in credit of RM110mil which will be utilised to set off the company’s and group’s accumulated losses of RM54.97mil and RM76.97mil respectively as at March 31, 2025.
The group also manufactures and market industrialised building component or IBS products. Currently, the group has a total of three factories with wharf facility and capacity to supply 500,000 tonnes of building materials annually across Borneo.
SCIB is also into engineering, procurement, construction and commissioning (EPCC) business, with remaining projects having a total contract value of RM165.8mil.
“As a supplier of building materials, the group is also positioned favourably to bid for and secure EPCC contracts for large public infrastructure projects as well as building schools and social amenities’ projects in Sarawak.
“Coupled with the upcoming development plans announced by the state government of Sarawak, the group will endeavour to secure more EPCC contracts to grow its order book and diversify its revenue,” said the company.
To boost its future earnings, SCIB plans to collaborate with developers to jointly develop the group’s land for residential housing projects using the group’s manufactured products. Last year, SCIB entered into five sale and purchase agreements to acquire land in Kemena land district, Bintulu, measuring 9.84 ha for RM27.64mil.
