PETALING JAYA: Paramount Corp Bhd is selling controlling stakes in three subsidiaries to Two Horses Capital Sdn Bhd (THC) for an indicative cash consideration of RM540.5 million.
Following the disposal, it will pay RM177 million by way of special dividend to shareholders.
Paramount told Bursa Malaysia that it had on June 19 entered into a conditional share sale and purchase agreement with Character First Sdn Bhd and Two Horses Capital Sdn Bhd for the disposal at an enterprise value of RM861 million, subject to approval by the Education Ministry and shareholders.
The proposed disposal includes 69.7% of Paramount Education Sdn Bhd, 80% of Paramount Education (Klang) Sdn Bhd and 80% of Sri KDU Sdn Bhd, for RM134.5 million, RM21 million and RM385 million, respectively.
The proposed disposal is expected to result in a pro-forma gain on disposal of RM487.81 million, which will be utilised for special dividend distribution (RM177 million), acquisition of landbank (RM150 million), repayment of borrowings (RM133.65 million) and working capital (RM57.85 million). Paramount’s total borrowings stand at RM1.09 billion.
The group said in a statement that it is partnering with strategic investor THC to grow its K-12 education business regionally.
Its K-12 education business comprises the Sri KDU and REAL national and international schools, REAL Kids pre-schools and Cambridge English for Life (CEFL) enrichment centres. Another Sri KDU International School will open in Klang in 2021.
Paramount Group CEO Jeffrey Chew said the group will maintain a minority stake with board representation in Sri KDU Schools and REAL Education Group to ensure continuity in expertise and leadership in the schools.
He also said the move will help investors see Paramount’s two businesses of property development and education as stand-alone. Moving forward, Paramount will focus resources to grow its property development division.
TPG Capital Asia, the Asian investment platform of global alternative asset firm TPG, will provide financing to THC as well as strategic and operational support, including leveraging on its network and experience in the education sphere.
At the noon break, Paramount’s share price gained 12 sen or 5.8% to RM2.20 on 1.6 million shares done.
