By Fara Aisyah
PARAMOUNT Corp Bhd received the green light from the Education Ministry (MoE) for the sale of its controlling equity interest in its pre-tertiary education business to Prestigion Education Sdn Bhd, which was formerly known as Two Horses Capital Sdn Bhd (THC).
The pre-tertiary institutions involved in this transaction are Sri KDU Schools, REAL Schools, REAL Kids pre-schools and Cambridge English For Life enrichment centres.
The government’s consent was the last condition precedent to the completion of the sale and purchase agreement worth RM540.5 million cash, which was signed on June 19,2019.
The transaction is expected to be completed by the first quarter of 2020. Paramount group CEO Jeffrey Chew said the divestment has unlocked significant value for the company’s investment in the education segment, which paves the way for Paramount to focus its resources on growing its core business of property development.
"With the divestment. Paramount will look for good landbanks 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 in a statement yesterday.
Following the disposal, Paramount will retain an effective 20% stake in the pre-tertiary education business.
Paramount also has a minority stake in the tertiary education business, including a 35% stake in UOW Malaysia KDU, after divesting its controlling equity stake to University of Wollongong, an Australian public research university with a global network of campuses, in September 2019.
The group noted that of the proceeds, RM177 million will be distributed to shareholders as a special dividend (within six months of the completion of the transaction), M150 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, it said, the gain arising from the disposal is estimated at RM487.8 million. In June last year, Paramount announced that it was disposing of 69.7% of its equity interests in Paramount Education Sdn Bhd for RM134.5 million; 80% in Paramount Education (Klang) Sdn Bhd for RM21 million; and 80% in Sri KDU Sdn Bhd for RM385 million to THC.
The company, which is owned by is Tunku Ali Redhauddin Tuanku Muhriz and Ganendran Sarvananthan, is expected to fund the proposed acquisition using a combination of equity contributions from its shareholders, as well as external debt financing from one or more third-party lenders.
Paramount closed six sen or 4.65% higher to RM1.35 yesterday, giving it an RM819.02 million market capitalisation.
As published: The Malaysian Reserve