General Announcement
Reference No OD-060919-61655 |
| Submitting Merchant Bank |
:HWANG-DBS SECURITIES BERHAD |
| Stock Name |
: FRONTKN |
| Date Announced |
: 19/09/2006 |
| Type |
: Announcement |
| Subject |
: FRONTKEN CORPORATION BERHAD
("FRONTKEN" or "COMPANY")
Variation in Utilisation of Proceeds |
| |
Contents :
|
Pursuant to the listing exercise which was completed on 11 July 2006 following the listing of the entire issued and paid-up share capital of the Company on the MESDAQ Market of Bursa Malaysia Securities Berhad, FCB raised gross proceeds of approximately RM31.4 million ("IPO Proceeds") which were to be utilised as follows:
| |
Total
RM'000 |
| Construction of plant |
6,600 |
| Purcahse of machinery and equipment |
9,757 |
| R & D Expenditure |
6,300 |
| Repayment of bank borrowings |
3,000 |
| Working Capital |
4,082 |
| Estimated Share Issue and listing expenses |
1,700 |
| |
31,439 |
Of the total proceeds raised, FCB has allocated approximately RM9.8 million for the purchase of machinery and equipment, details of which were disclosed in the Company's Prospectus dated 22 June 2006. In relation thereto, FCB would like to announce that the Company intends to vary the utilisation for machinery and equipment to be purchased, as set out in Table 1 below.
As at the date of this announcement, none of the IPO Proceeds allocated for the purchase of equipment and machinery has been utilised yet.
The above variation in utilisation is mainly due to the need to upgrade and expand the machinery's capacity of the Group, and having reviewed the industry trend and business prospects, the Directors deem it commercially expedient to prioritize the purchase of engineering machinery and equipment. In this connection, the Directors are of the view that it would be more cost efficient and beneficial to the operations of the Group in the long term to install the engineering machinery and equipment to cope with the required mechanical processes than to outsource the same to third parties, as it has in the past. The Directors expect that the purchase of these machinery will not only enable the Group to reduce the turnaround time of the projects and enhance its production efficiency, but will also improve its margin and thus, the profitability of the projects.
With this development, the Directors are of the opinion that it would be more efficient to channel the IPO Proceeds earmarked for spraying systems for this purpose, than to finance the purchase with borrowings.
There is no change to the timeframe for the utilisation of IPO Proceeds for the purchase of machinery and equipment.
This announcement is dated 19 September 2006.
|
|
|