Aspen Group, the Malaysian property developer, says it intends to include the manufacturing and distributing of rubber gloves under its scope of core business on September 2.

The group, on August 12, entered into a joint venture agreement (JVA) with investment holding company CMY Capital to diversify its business into the manufacture and distribution of rubber gloves. The agreement was signed by the group’s wholly-owned subsidiary AVA.

“Although being a new entrant during a period of strong market demand, we believe that global demand for rubber gloves will steadily increase in the long run and with strategic planning around pricing, competitors, marketing strategies and distinctive positioning, the Group will be able to penetrate the market and gain a reasonable market share,” said president and group CEO of Aspen Group Dato’ M. Murly, in a statement dated August 12.

Following the announcement, Aspen Group’s rubber glove joint venture company (JVC) Aspen Glove Sdn Bhd, has on August 28, increased its issued and paid-up share capital from RM100 ($32.75) comprising 100 ordinary shares to RM10 million comprising 10 million ordinary shares.

To that end, Aspen’s subsidiary AVA now holds 70% in Aspen Glove, followed by CMY Capital and Aspen Glove’s managing director Iskandar Basha at 25% and 5% respectively.

Iskandar, who held roles in the Penang Development Corporation (PDC) and the Economic Planning Unit in the Prime Minister’s Department in Malaysia, was appointed as managing director on September 2.

AVA, CMY Capital and Aspen Glove have also entered into a formal joint venture and shareholders’ agreement (JVSA) on September 1 to regulate the joint venture and their relationship as shareholders in Aspen Glove.

On the same day, Aspen Glove entered into a lease agreement with Kulim Technology Park Corporation for the lease of the piece of industrial land measuring 29.331 acres located at Kulim Hi-Tech Park in Kedah Darul Aman (Land A).

Aspen Glove, on August 12, accepted a binding letter of offer from Kulim Technology to lease the land. The letter of offer also included a first right of refusal with Kulim Tech for the lease of a piece of industrial land measuring 37.031 acres located adjacent to Land A, at Bandar Lunas, Daerah Kulim, Kedah Darul Aman (Land B).

In the same statement on September 2, Aspen Glove says it is in the midst of finalising a candidate for its COO position. The company has also submitted an application to obtain the development order and building plan approval for the construction of the industrial factory at Land A for the rubber glove business.

Following the JVSA, Aspen Glove will act as the joint venture vehicle to which the rubber glove business will be operated from.

The funding of the new business will come from a mix of internal funds from shareholders and external borrowings. AVA and CMY Capital will contribute to the initial capital requirements of Aspen Glove, which is estimated at RM105 million for the construction and operation of the first facility on Land A.

The initial capital injection of the first RM10 million has been carried out via a subscription of ordinary shares and the remaining RM95 million is expected to be invested via a subscription of redeemable convertible preference shares by AVA and CMY Capital, as and when required.

Under the terms of the JVSA, subsequent capital injections shall be contributed by AVA and CMY Capital via the subscription of redeemable convertible preference shares of AGSB of 73.68% and 26.32% respectively.

As at 4.50pm, shares in Aspen are trading 1 cent lower, or 3.8% down, at 25 cents.