Sapura selling its 49% stake in education arm

PETALING JAYA: Diversified group Sapura Resources Bhd (Sapura) is selling its entire 49% stake in APIIT Education Group to ILMU Education Group Sdn Bhd for RM246.98 million, a deal that could pave the way for a possible listing of the latter.

Ekuiti Nasional Bhd (Ekuinas), via its education arm ILMU, holds a 51% stake in APIIT Education Group, which it acquired from Sapura in 2010 for RM102 million.

In a filing with the stock exchange yesterday, Sapura said it has entered into a conditional share sale agreement with ILMU to dispose of its entire stake in APIIT Sdn Bhd, Asia Pacific Univesity Sdn Bhd (APU) and Asia Pacific Institute of Information Technology Lanka (PVT) Ltd (APIIT Lanka).

Sapura is proposing to dispose of its 49% interest in APIIT comprising 1.22 million RM1.00 shares plus 1.22 million new APIIT for RM58 million cash, its entire 49% stake in APU comprising 9.8 million RM1.00 shares for RM161.98 million, and its its entire 37.61% interest in APIIT Lanka comprising its beneficial interest in 4.34 million ordinary shares for RM27 million.

The deal includes APIIT disposing of its 100% stake in Asia Pacific Schools Sdn Bhd (APS) comprising 2.5 million RM1.00 shares to ILMU for RM138.8 million.

Thereafter, APIIT will declare dividends to its shareholders (ILMU and Sapura), whereby ILMU and Sapura will be entitled to dividends of RM70.78 million and RM68.01 million, respectively, Sapura said in the statement.

Subsequently, APIIT will undertake a bonus issue of 2.5 million new APIIT shares to its shareholders.

Sapura said it plans to use part of the sales proceeds amounting to RM90.8 million and the dividends to be received from APIIT for future expansion and general working capital requirements. It also intends to use RM144.6 million from the sale proceeds to partly repay outstanding term loans of RM127.8 million as at Feb 29 2016.

After the completion of the proposed disposals, Sapura plans to distribute part of the proceeds as special dividends amounting to 5 sen per share, within three months from the receipt of the proceeds.

"Based on the number of ordinary shares in issue of 139.6 million as at March 9 2016, the proposed dividends to be distributed will amount to about RM6.98 million," it said.

As a result of the proposed disposals, the Sapura Resources group will realise a one-off pro forma gain of about RM192.2 million based on the audited financial statements for the financial year ended Jan 31, 2015.

In its rationale, SRB said although the APIIT group's education business has been able to generate profits and declared dividends to its shareholders in the previous four years, it is now entering the next phase of long-term development and growth, which requires significant investment for the construction of APU's new campus which is expected to be completed by 2016.

Hence, it believes that, strategically, it would be more value accretive in the long-run to unlock the value of its non-controlling stakes in the APIIT group and utilise its funds to grow its property-related businesses, in particular its Lot 91 KLCC development as well as its aviation business.

The deal is expected to be completed by the third quarter of this year.