Spring Art to raise RM24m from ACE Market

The ready-to-assemble furniture manufacturer plans to use RM17.6m of the IPO proceeds to acquire new machinery for new manufacturing plant

By SULHI KHALID / Pic By ARIF KARTONO

FURNITURE maker Spring Art Holdings Bhd aims to raise RM24.4 million from its initial public offering (IPO) on the ACE Market of Bursa Malaysia, tentatively set for Nov 8 this year.

The ready-to-assemble furniture products designer and manufacturer plans to use RM17.55 million or 71.9% of the IPO proceeds to acquire new machinery to set up two additional production lines for its new manufacturing plant, Factory C in Muar, Johor.

“The machines are from Italy and Germany as we are aiming to replace workforce with machinery,” Spring Art CFO Christine Teo said at the prospectus launch in Kuala Lumpur on Tuesday.

The group will further utilise RM3.67 million or 15% of the proceeds for general working capital requirements, while the remaining RM3.2 million or 13.1% will be used to defray listing expenses.

Factory C, which is expected to commence operations in July 2022, will increase the group’s combined annual manufacturing capacity to approximately 674,000 units per annum. The company’s current total annual production capacity stands at 337,016 units.

“We plan to construct Factory C, with a total estimated factory built-up area of approximately 9.29ha (103,926 sq ft) to undertake the manufacturing of office furniture, bedroom furniture, living room furniture and other furniture for export to North America and Europe and for our existing customers,” Spring Art MD Jack Lim Kok Eng said.

The ongoing trade war between Washington and Beijing will benefit the group, Lim added, as it sees huge demand and enquiries from the US.

The group supplies its ready-to-assemble furniture products to 35 countries, with the majority being in the Middle East and Asia Pacific including Saudi Arabia, India, the United Arab Emirates, Canada and Bahrain.

Under the listing exercise, Spring Art will issue 97.68 million new shares in the group, representing approximately 23.5% of its enlarged share capital.

Of the 97.69 million new shares, 20.78 million units will be offered to the public, 4.16 million to eligible directors and staff, and the remaining 72.75 million to be placed out to selected Bumiputera investors.

Existing shareholders of the company will also make an offer of sale for 27.02 million shares by way of private placement to selected investors.

The Johor-based company’s IPO price is set at 25 sen per share. Based on the enlarged share capital of 415.69 million shares, the group is expected to have a market capitalisation of RM103.92 million.

Spring Art is principally involved in the manufacturing of ready-to-assemble furniture products, where it undertakes the design and development, manufacturing as well as marketing and sales of office furniture, bedroom furniture, living room furniture as well as other types of furniture.

Its manufacturing processes, save for lamination activities, are presently carried out at its manufacturing factories in Muar, Johor.