SOUTHERN Packaging Group has received a boost of about $4.9 million by investors in the food and beverage industry.
Yesterday the company signed an agreement to issue 35.6 million new shares at 13.8 cents.
Sam Goi, executive chairman of Tee Yih Jia Food Manufacturing, took half of the new shares, while Super Coffeemix Manufacturing took 42 per cent. The remaining shares were taken up by two executive directors of Super Coffeemix and by its chairman, David Teo.
The placement price represents a discount of 4.8 per cent to the weighted average price of 14.5 cents per share for trades done on Sept 12 and up to the time when the agreement was signed.
The placement shares represent about 13 per cent of the enlarged issued and paid up capital of Southern Packaging.
Yesterday, Southern Packaging president Pan Shun Ming said that the proceeds from the placement will be mainly used for the company's expansion in China.
Mr Pan also said that the investment by Mr Goi and Super Coffeemix paves the way for further collaboration because their businesses complement each other.
'They do food manufacturing, and we make packaging products for food,' Mr Pan said.
Mr Teo said that although Super Coffeemix has a range of packaging suppliers, investing in Southern Packaging would give his company more control over the quality of packaging of its products.
Having better quality packaging would also make it harder for others to imitate Super Coffeemix's products, Mr Teo said.
Southern Packaging announced a 35 per cent fall in net profit to $2.1 million for the half year ended June 30 although revenue rose 6 per cent to $43.9 million. This was due to rises in production costs and increase in raw material prices.
However, Mr Pan said that he expects double-digit growth for the second half of the financial year as the utilisation of one of its factories increases.
'This investment by Mr Goi and Super Coffeemix shows their confidence in our company,' Mr Pan said.