KUCHING: Borneo Oil Bhd’s plans to set up a new fast food central processing plant here is to cope with the increasing demand for food ingredients from the group’s fast food chain SugarBun.
The company said its existing rented factory’s current capacity was not sufficient to cater for the increase in the sales of its fast food business.
The group manufactures and supplies some ingredients, including controlled ingredients, to SugarBun restaurant chain, with most of its outlets based in Sarawak.
“The management has yet to enter into any agreement for the (proposed) new fast food central processing factory,” Borneo Oil said in reply to queries from Bursa Malaysia related to its multiple corporate proposal as announced recently.
The group has proposed to utilise RM5mil from the proceeds of a proposed private placement to finance the set up of the new fast food central processing plant.
There are some 70 franchised SugarBun restaurants in Malaysia and overseas, including in Brunei, China, Australia and Bangladesh. The group has plans to increase the number to 100 outlets.
For the financial year to Jan 31, Borneo Oil recorded a RM2.03mil profit from the fast food operations.
The private placement, which is expected to raise up to RM35.5mil, involves an issuance of up to 20% of the company’s issued and paid up share capital, and would be implemented after a proposed par value reduction.
Borneo Oil proposes to cancel 90 sen of the par value of its existing share of RM1 to offset its accumulated losses of RM32.5mil.
The company said the proposed par value reduction was part of an on-going efforts to strengthen its financial position and to better reflect the value of the group’s underlying assets.
It said as Borneo Oil shares had been trading below the existing par value of RM1 since Jan 14, 2008, it was, therefore, not conducive for the company to embark on any fund raising exercise involving the issuance of new shares.
By reducing the par value of the company shares to 10 sen each would provide flexibilty for Borneo Oil to embark on future fund raising or other corporate exercises involving new issuance of shares which could then be above 10 sen each.
From the proceeds of the private placement, the group intends to use RM10mil to purchase new mining plant and equipment and another RM5mil to fund gold exploration activities in Pahang.
To recap, wholly-owned subsidiary Borneo Oil & Gas Corporation Sdn Bhd was appointed by Champmark Sdn Bhd last March as the contractor to carry out prospecting and mining of alluvial and lode gold on an exclusive basis on an area covering some 162ha in Mukim Batu Yon, Lipis district.