PARAMOUNT BULLISH ON PROPERTY ARM
Company selling 80pc stake in lossmaking education unit for RM540.5m
PARAMOUNT Corp Bhd (PCB) is confident of significant contribution from its property ventures in the coming years as it seeks to sell an 80 per cent stake in the company’s education division for RM540.5 million.
The company yesterday obtained its shareholders’ approval
to dispose of its controlling stake in the loss-making pre-tertiary education segment.
Paramount’s pre-tertiary education group, comprising Sri KDU Schools, R.E.A.L Education schools and pre-schools, as well as Cambridge English for Life (CEFL) enrichment centres to Prestigion Education Sdn Bhd.
On June 19, the company signed an agreement with Prestigion Education to dispose of the 80 per cent stake.
Paramount group chief executive officer Jeffrey Chew said the company had overcome the first hurdle by obtaining the shareholder approval and was now waiting for approval from the Education Ministry.
“The go-ahead from the authorities will pave the way for Paramount to focus on its core business and explore new opportunities, while retaining 20 per cent stake in the pre-tertiary education segment,” he said after the company’s extraordinary general meeting, here, yesterday.
Upon completion of the disposal, RM177 million from the proceeds will be distributed as a special dividend to shareholders and RM150 million will be used to buy land.
Another RM133.6 million will be used to partially repay borrowings, improving Paramount’s gearing level and resulting in a RM6.9 million saving on interest per year. The remaining proceeds will be used as working capital.
The transaction will generate a pro forma gain on disposal of about RM487.8 million, which will improve the company’s earnings per share by RM1.10 a share.
Chew said the property division would help cushion revenue losses dragged by the education segment for the last five years.
“We had achieved property sales of RM310 million in the first six months of the year, amounting to about 70 per cent in revenue for the company.
“We also registered a record high of RM978 million in unbilled sales as at June 30 this year.
“For now, we are reaching between RM800 million and RM1 billion in our property segment and it will cushion the losses dragged by the education segment,” he said.