Chinese mattress maker China-based Healthcare Co. Ltd. plans to raise up to 1.3 billion yuan ($210 million) in a stock sale with part of the funds going to finance an expansion at its Phoenix manufacturing site.
In an Oct. 28 announcement, the company — which makes the Mlily-brand memory foam mattresses — said it will spent 257 yuan ($41 million) at the Phoenix site with another 459 million yuan ($71.8 million) going to a textile covers and spring plant at a Nantong plant near its headquarters.
The rest will be allocated to smart manufacturing upgrade and working capital, said the company.
The Arizona facility opened in 2020 with the capacity to produce $140.77 million worth of mattress products, Healthcare Co. official said. They declined to disclose more details on the expansion project. The company also produces Mlily mattresses in the U.S. in Winnsboro, S.C. That site opened in late 2019.
The announcement comes as subsidiaries in Thailand and Serbia have been levied 763 percent and 112 percent for anti-dumping duties since March 2021 for exports to the U.S. Its Chinese affiliates are also heavily taxed with up to 163 percent for anti-dumping and 98 percent in countervailing duties.
The U.S. has been the world's largest mattress consuming country with a $9 billion market in 2020. This compares to an $8.5billion China market last year.
"Exporting mattresses from those sites to the U.S. is no longer profitable," the company said. The company will also repurpose 194 million yuan ($30.3 million) it had raised for an expansion in Serbia to fund the Arizona expansion, it said.
Healthcare had 6.1 billion yuan ($954 million) in sales over the first three quarters of 2021, up 35 percent from 2020, but it reported a net loss of 180 million yuan ($28 million) net loss during the period due to "rising costs and expenses," said its quarterly report.