KUALA LUMPUR: Steel trading and processing company Leon Fuat Bhd, en route to a listing on the Main Market of Bursa Malaysia, plans to raise up to RM35.58mil from the sale of 59.31 million new shares at 60 sen each.
Of all shares, 33.81 million would be placed out to selected investors, 15.5 million offered to the public and the balance 10 million offered to eligible directors and staff.
The initial public offering would also involve an offer for sale of up to 31 million shares to approved bumiputra investors.
Leon Fuat executive director Calvin Ooi said the company would pay up to 30% of earnings in dividends each financial year subject to cash position and expansion or investment plans.
Ooi said at the launch the company's IPO prospectus that of the gross proceeds raised, RM13mil would be used to partly repay the bank borrowings to purchase new industrial land with building located opposite its headquarters in Shah Alam, while RM6mil would be utilised to build a processing plant, with warehousing facilities on the land. The processing plant was expected to be completed by 2016.
Of the remainder, RM6mil would be used to purchase new machines, RM7.8mil for working capital and RM2.8mil for listing expenses.
According to chief financial officer Tan Kien Yap, the company's net gearing would be pared down to 0.67 times from 0.92 for the financial year ended Dec 31, 2012 after the repayment of part of its borrowings.
Ooi said the company planned to improve margins by increasing the steel processing business with the addition of two new slitting machines by 2016.
“We are trying to diversify the products that we offer to the market,” he said, adding that the two new machines that it intended to invest in, for instance, would allow it to penetrate new markets through the new products produced.
Ooi added that the company would strive to expand in both local and overseas markets.
Currently, 98% of revenue comes from the domestic front while 2% is from overseas markets including countries such as Japan, Singapore, Indonesia and Thailand.
Ooi said the company would continue to explore ways to improve the ratio between the local and overseas market contributions but did not specify how or where the company would do this as it was focusing on the domestic market.
The majority of Leon Fuat's customers cut across various industries including construction, automotive and manufacturing small-medium enterprises.
It markets carbon, stainless and alloy steel as well as long and flat steel products, besides undertaking different steel processing operations.
Ooi is positive on the company's outlook on the back of the country's robust economic prospects and demand from government-linked initiatives, including the Economic Transformation Programme-related projects.
http://biz.thestar.com.my/news/story.asp?f...16&sec=business