Chusak said initially the price was set in the range of Bt2.70-Bt3.30 per share.

The company will offer 150 million shares, of which 50 million will go to existing shareholders at a ratio of eight existing shares to one new one, while another 50 million shares will be sold to the public and the remainder will be reserved for warrant conversion.

Existing shareholders will receive one free warrant for every two shares.

Chusak said the company's board had decided to issue new shares to raise funds for plant construction instead of borrowing as it wants to maintain the company's debt to equity (D/E) ratio below two times. Currently, the D/E ratio is 1.36 times.

"Also, we've received feedback that investors and existing shareholders have expressed their interest to acquire more shares in our company. Although doing so would cause the existing shareholders a dilution effect of around 18 per cent, it's better than asking for loans," said Chusak.

Asia Metal, which listed on the Stock Exchange of Thailand in August 2004, is raising Bt175 million from a 50-million-share offering. The metal producer and distributor expects the new factory will be completed in the third quarter next year and will perform test runs by the last quarter.

With the new factory worth Bt600 million-Bt700 million in investment, the firm expects to increase the production of its steel service centre, including hot-rolled and cold-rolled coil, to 60,000-80,000 tonnes per year. Pipe production will expand to 120,000 tonnes per year. The new factory will also be able to produce larger pipes. The current size is 0.5-4 inches and new factory will produce pipes from 4-20 inches.

It is expected that the company's revenue will jump 30 per cent. Last year, it generated Bt4.8 billion in revenue.

The company forecasts that this year and next year, revenue will grow only around 5-10 per cent as its operation is almost at full capacity. Besides its existing customers in the construction industry, Asia Metal aims to expand its customer base to the motor and electronics industries.

"Globally, M&A will control the supply in the market. Domestically, everything will be clearer next year, so investment is expected to start," said Chusak.

Siriporn Chanjindamanee

 The Nation