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The Edge Markets – LKL International Gets Shareholders’ Nod For Private Placement And ESOS

KUALA LUMPUR (Oct 13): Medical and healthcare equipment provider LKL International Bhd obtained shareholders’ approval in an extraordinary general meeting (EGM) today to undertake a private placement and employee share option scheme (ESOS). The private placement proposed on July 17, 2020 entails the issuance of up to 85.8 million placement shares amounting to not more than 20% of total ordinary shares issued at an indicative price of RM1.10 per share.
In a statement today, LKL said with up to RM94.3 million projected to be raised, the group plans to allocate RM26.5 million for capital expenditure (capex) and expansion plans.

It said the majority of capex is for the RM13 million purchase and set-up of two units of adjoining new factory buildings near the group’s current head office and manufacturing facilities. LKL said the new factory buildings would be used for the manufacturing and assembly of medical/healthcare beds, peripherals and accessories, and as a production office and warehouse for finished goods.

Additionally, LKL said it would invest RM9.5 million of the proceeds to construct a three- storey steel structure extension across existing factory buildings and instal a conveyor line to automate its epoxy powder coating process. Another RM4 million of the capex would be used to purchase a variety of new machineries.
LKL managing director Lim Kon Lian said Covid-19 had heightened the urgency for healthcare service providers to increase their capacities and better equip their capabilities. “In line with this, we are currently witnessing greater demand for medical beds from hospitals and medical centres, with orders in hand of more than 750 beds to be delivered over the next 14 months. “With strong demand within the healthcare sector expected to persist, our capex and expansion plans are timely to enhance manufacturing capacities and capabilities to fulfil this uptrend.

“The proposed private placement would help us raise funds expeditiously and cost- effectively to fund our manufacturing capex.

“In addition, the proceeds would also improve the company’s liquidity and financial flexibility, and strengthen our overall financial position through an enlarged working capital to support our growth,” he said. In the EGM, LKL also also obtained shareholders’ approval for the proposed ESOS announced on July 17, 2020, encompassing the issuance of up to 15% of the enlarged total number of issued ordinary shares and private placement shares.

The firm said the ESOS would be carried out and completed upon the expected completion of the private placement exercise in the first half of 2021. At 12pm today, LKL had risen 1.92% or two sen to RM1.06, valuing the stock at RM454.53 million.

October 13, 2020

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