The MAI-listed LV Technology (LVT) will issue 396.69 million new shares to raise funds to invest in a cement business in Myanmar through a unit of the Max Myanmar Group of Companies.
LVT is an engineering consulting firm that mainly provides equipment and expertise to the cement market.
Hans-Jorgen Nielsen, LVT's founder and managing director, said setting up the new entity will give the company a 15% stake in Max Manufacturing Co.
"This investment is an important turning point that will put the company on a more solid footing and provide stable revenue in the long term," he said.
Mr Nielsen said the company will renovate two present cement factories located close to Myanmar's new capital of Nay Pyi Taw.
Max Manufacturing's daily cement production capacity will increase from 500 tonnes now to 2,600 tonnes by the end of next year and 4,200 tonnes in 2014.
The Myanmar investment is expected to generate annual revenue to the company of 100-150 million baht starting in 2014 or a 28% return.
A stable revenue stream from this project may allow the company to pay dividends to shareholders, said Mr Nielsen.
At present, Myanmar consumes 4.5 billion tonnes of cement per year including 2.5 billion tonnes imported.
"The cement business in Myanmar is expected to see rapid growth such as that seen in Thailand 30 year ago. Thailand's cement business has grown six-fold since that time, and Myanmar's is expected to grow by 10-12% per year, based on an assumption of 5% GDP growth."
The investment will be funded by the capital increase, selling part of the company's Indian investment and internal cash flow.
Of the 396.69 million new shares, 51 million will be earmarked for private placement and 345.69 million for a rights offering to existing shareholders in a ratio of three old shares for one new share at 1.25 baht apiece.
The capital increased is subject to shareholders' approval at an extraordinary shareholders' meeting scheduled for Nov 19.
Mr Nielsen said LVT will divest some of its stake in LVNT, its Indian subsidiary, by selling a 25% shareholding to Chinese investors for 180 million baht.
This extraordinary revenue item will be booked in the fourth quarter.
Chief executive Worayuth Termsricharoenporn said the extraordinary revenue will help the company return to profit, with retained losses of 200 million baht eliminated by 2014.
In the first half of this year, LVT posted a net loss of 93.4 million baht compared with a net loss of 17.1 million baht in the same period last year.
Shares of LVT closed yesterday on the MAI at 1.40 baht, up six satang, in trade worth 58.3 million baht.
