PETALING JAYA (Jan 29): Paramount Corp Bhd will place greater focus on property development following the divestment of its education business, said Paramount Group CEO Jeffrey Chew (pictured) in a statement today, announcing the Ministry of Education’s (MOE) approval for the sale of its controlling equity interest in its pre-tertiary education business to Prestigion Education Sdn Bhd (formerly Two Horses Capital Sdn Bhd).
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 while exploring new business opportunities.
“With the divestment, Paramount will look for good landbank 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,” Chew added.
MOE’s approval is the last condition precedent to the completion of the Sale and Purchase agreement signed on June 19, 2019. The transaction is expected to be completed by 1Q2020.
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.
Paramount shareholders had approved the transaction worth RM540.5 million cash at an Extraordinary General Meeting Sept 13, 2019.
Of the proceeds, RM177 million will be distributed to shareholders as special dividend (within six months 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 gains arising from the disposal is estimated at RM487.8 million.
Paramount will retain an effective 20% stake in the pre-tertiary education business. It also has a minority 35% stake in the tertiary education business.
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 3Q2019.