Last condition for the sale of Sri KDU and REAL schools fulfilled
PETALING JAYA, 29 January 2020: The Ministry of Education (MOE) has approved Paramount Corporation Berhad’s sale of its controlling equity interest in its pre-tertiary education business to Prestigion Education Sdn Bhd (formerly known as Two Horses Capital Sdn Bhd). MOE’s approval is the last condition precedent to the completion of the Sale and Purchase agreement signed on 19 June 2019. The transaction is expected to be completed by Q12020.
The pre-tertiary institutions involved in this transaction are Sri KDU Schools, R.E.A.L Schools, R.E.A.L Kids pre-schools, and Cambridge English For Life (CEFL) enrichment centres.
RHB Investment Bank, the principal adviser for the transaction, made an announcement to this effect to Bursa Malaysia yesterday evening (28 January). Earlier, Paramount shareholders approved the transaction worth RM540.5 million cash at an Extraordinary General Meeting on 13 September 2019.
Of the proceeds, RM177 million will be distributed to shareholders as special dividend (within six month of the completion of the transaction), RM150 million to acquire landbank (within 24 months), RM133.6 million to partially repay borrowings (within six months, with expected savings in bank interest of RM6.9 million a year) and RM57 million will be used as working capital (within 12 months). On a proforma basis, the gain arising from the disposal is estimated at RM487.8 million.
Paramount Group CEO Jeffrey Chew said the divestment has unlocked significant value for Paramount’s investment in the education segment. This paves the way for Paramount to focus its resources into growing its core business of property development. At the same time, it will explore new business opportunities. Paramount will retain an effective 20% stake in the pre-tertiary education business.
Paramount also has minority stake in the tertiary education business, i.e. a 35% stake in UOW KDU, after divesting its controlling equity stake to University of Wollongong, an Australian public research university with a global network of campuses. The sale was completed in September 2019.
“With the divestment, Paramount will look for good land banks that we can develop in the next five years. Where there is synergy and greater efficiency, we will go into joint ventures, not just in property development but also in property-related businesses. We will strengthen our construction capabilities and will continue to expand our co-working spaces and services, among other things in the pipeline. Last but not least, we will be venturing into property development overseas,” he said.
Chew said he was confident that Prestigion Education, led by Tunku Ali Redhauddin ibni Tuanku Muhriz and Datuk Ganen Sarvanathan, has the right capability, experience and resources to raise brand visibility and take Sri KDU and R.E.A.L schools to another level.
Sri KDU is due to open a new international school campus at Berkeley Uptown, Klang in 2021. Berkeley Uptown is a 33-acre freehold integrated development offering by Paramount Property. The first phase of residential units was launched in Q32019.
