The acquisition of the factory owned by D&W Food Products (Pvt) Limited has been recommended to shareholders by the directors of KFP in order to cater to the growing consumer market for processed foods.
KFP shareholders have been told that the company’s existing facility at Ja-Ela is reaching its maximum capacity and following evaluation of available options, the management had recommended the acquisition of the D&W facility.
"This gives KFP the advantage of commencing production immediately, as opposed to setting up a production facility. After the acquisition of the facility, the management proposed to carry out expansion work at the premises to cater to the growing needs of the market," the KFP directors have said.
They have estimated the total cost of expansion at Rs.650 million and propose to utilize the proceeds of a rights issue under which KFP shareholders are being offered two ordinary shares of the company for every one share held at a price of Rs.60.
Up to 17 million new ordinary shares will be issued through this rights issue which is not underwritten. KFP has said that in the event of under-subscription, the company will fund its investment through the increased debt capacity facilitated by the rights issue and alternative financing sources which in the medium term will include internally generated funds.
The KFP share closed in April at Rs.88, in May at Rs.74.30 and in June at Rs.90.10.