Prolexus heads for Vietnam to leverage TPP

16 Dec '15

3 min read

Malaysian apparel major Prolexus Bhd is making a cash call to raise up to 62.53 million ringgit ($14.5 million) in order to set up a garment factory in Vietnam to cash in on the Trans Pacific Partnership Agreement (TPP). It also wants to set up a fabric mill in Johor to expand into upstream garment production, the media in Malaysia has reported.

In a filing with Bursa Malaysia, the garments and children's apparels manufacturer said the proposed rights issue entails the issuance of up to 62.53 million shares, with a similar number of warrants.
The issuance will be on the basis of one rights share and one warrant for every two existing Prolexus shares held on an entitlement date to be fixed later, it said.

Based on the indicative issue price of one ringgit per right shares and one ringgit for exercise price for each warrants, Prolexus expects to raise a gross proceeds of between RM55.5 million($12.9 million) and RM62.5 million ($14.5 million) from the corporate exercise.

Of the proceeds, 22 million ringgit ($5.1 million) has been earmarked for the Vietnam factory (land acquisition cost, however, will be paid with internal funds) while between 31.85million ringgit ($7.4 million) and 38.93 million ringgit ($9 million) will be for the fabric mill.

Prolexus anticipates the construction of the new factory to commence in 2016. It will be completed and be fully commissioned by 2017, with an initial production capacity of about 4.5 million pieces annually.

Prolexus said the plant, to be constructed near the Tien Giang province in Vietnam, was part of its strategy to capitalise on the various benefits expected under the Trans-Pacific Partnership Agreement (TPP).

Vietnam had also recently signed an FTA with the European Union, which is expected to spur further growth in its export market to the region especially on the garment and textiles related products. Prolexus expects to grow its exports to the European Union by setting up a plant in Vietnam.

Prolexus also intends to use between 57.4 per cent to 62.3 per cent of the funding proceeds to set up a new fabric mill in Kluang, Johor, to expand into upstream garment production, which would complement its existing core business of apparels manufacturing.

The management expects the fabric mill, to be built on 11.2 ha in Kluang, Johor, to have an estimated annual production capacity of about 15.0 million yards. (SH)

Fibre2Fashion News Desk – India

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