LKL International Bhd (LKL) has proposed to diversify into the rubber gloves and personal protective equipment (PPE) business.
The company has also proposed a private placement of up to 355.05 million shares at an issue price to be determined later, of which proceeds will be utilised for the new businesses.
LKL said recently that after taking into consideration the current market demand for rubber gloves and PPE following the Covid-19 pandemic, the group had resolved to venture into the new businesses.
The Covid-19 pandemic exposed a critical shortage of supplies for medical gloves and put a strain on these healthcare supplies. The market for disposable rubber gloves rose in the past year and laid a solid foundation for future growth. Despite the introduction of various Covid-19 vaccines, vaccination progress has been slow in most countries, especially in the emerging markets.
The group is currently involved in the manufacturing of medical/healthcare beds, medical peripherals, and accessories, as well as the trading of medical furniture, medical devices, medical peripherals and accessories.
The group has also intended to enter into distribution agreements with suppliers of rubber gloves and PPE.
“The proposed diversification allows the group to capitalise on the increasing demand for rubber gloves and PPE while making the most out of the opportunities created by the Covid-19 pandemic.
“It will also provide an additional revenue stream to the group’s current core business,” it said.
Based on the illustrative issue price of RM0.16 per placement share, some RM56.81 million to be raised from the proposed private placement would be utilised for the trading of rubber gloves and PPE, setting up new storage facilities, and defray expenses for the proposals.
LKL said it reasonably expects its future participation in the new businesses may result in the diversion of more than 25 per cent of the net assets of LKL Group, and may result in contributing 25 per cent or more of the group’s net profits.
As such, it said the company had proposed to seek the approval from the shareholders for the proposed diversification.