Saturday, 12 July 2025

SCIB plans RM53.45 million rights issue for new plant

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KUCHING: Sarawak Consolidated Industries Bhd (SCIB) is undertaking a proposed rights issue with warrants that could potentially raise up to RM53.45 million to mainly fund its new manufacturing plant project.

The fund raising exercise entails the issuance of renounceable rights of up to about 763.65 million new ordinary shares together with 763.65 million free detachable warrants on the basis of one rights share together with one warrant C for every one existing share held by the entitled shareholders on an entitlement date to be announced later.

The company has also proposed reduction of its share capital by RM110 million to eliminate its accumulated losses.

As of March 31, 2025, SCIB’s accumulated losses at company level was RM54.97 million and at group level, RM76.97 million.

To ensure meeting the minimum subscription level to raise at least RM10 million, SCIB executive chairman and major shareholder Datuk Chong Loong Men will subscribe in full for his entitlement of rights shares and, if required, additional rights shares not taken up by other entitled shareholders by way of excess rights share application.

Chong currently owns 40,543,257 shares (5.8 per cent) in SCIB, whose core business is in the manufacturing and sale of precast concrete products as well as industrialised building system (IBS) products.

Based on an illustrative issue price of RM0.07 per rights share, the fund raising exercise could raise up to RM53.454 million (maximum scenario), SCIB told Bursa Malaysia.

If only RM10 million is raised, SCIB said the entire proceeds will be utilised to finance the construction of the new manufacturing plant and purchase of factory machineries.

If RM53.454 million is raised, RM20 million will go to financing the new factory project, RM19 million for repayment of bank borrowings, RM13.574 million for working capital and RM880,000 to pay for the estimated expenses for the corporate exercise.

The construction cost of the new manufacturing plant is estimated at RM38.62 million while the purchase of machinery, RM18.95 million, bringing to total RM57.57 million.

“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 exercised to be undertaken, if required.

“However, the funding breakdown cannot be determined at this juncture,” said SCIB.

For the construction of the new factory, SCIB had in January 2024, accepted an offer from the Sarawak Land and Survey Department for the acquisition of five industrial leasehold plots measuring a total of approximately 21.88 acres at Demak Laut Industrial Park Phase IIb (Stage 2) for RM21.62 million.

The land was offered as part of SCIB’s plan to relocate its existing factory in Pending Industrial Estate to Demak Laut Industrial Park.

The purchase price is repayable over five annual instalments, and the company will be able to enjoy a rebate in the form of an exemption from paying the fourth and fifth annual instalments if it is able to complete the construction of the new factory within three years.

The company has so far paid the first and second instalments, leaving the remaining balance of RM11.69 million which is expected to be met via bank borrowings that have already been secured by the company.

SCIB said the new factory, which is expected to have a built-up area of approximately 16,300 square metres, will enable the company to expand its current production capacity to meet the anticipated increase in market demand for concrete-related products.

This move, it said, is in line with the development plans of the Sarawak government over the coming years, which includes the construction of public infrastructure projects throughout Sarawak.

Currently, the group has three factories with wharf facility to supply 500,000 tonnes of building materials annually across Borneo.

Moving forward, the group intends to focus on, amongst others, growing its existing manufacturing business.

“The group’s range of precast concrete and IBS products, quality certifications as well as production capacity position it favourably to support the building materials requirements for large public infrastructure projects as well as building schools and social amenities projects in Sarawak and the wider Borneo region.

“Thus, the group will focus on continuously enhancing its manufacturing capabilities as this will position the group favourably to capture opportunities to be appointed as a supplier of precast concrete and IBS products for large public infrastructure projects as well as building schools and social amenities projects.

“In addition, the group intends to focus on completing its current ongoing EPCC contracts and secure more EPCC projects.

“As of 30 May 2025, the group is involved in EPCC and construction projects with total remaining contract value of RM165.78 million,” said SCIB.

The group also plans to venture into property development as it has entered into five sale and purchase agreements to acquire 9.84 hectares of land in Bintulu for RM27.64 million.

The land purchase, said SCIB, is to expand the group’s business operation by collaborating with developers to jointly develop residential housing projects using the group’s manufactured products.

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