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PETALING JAYA: In a bid to streamline assets to achieve a more efficient capital structure and realise investment value, Paramount Corp Bhd is selling three of its campuses in Penang and Selangor to Dynamic Gates Sdn Bhd (DGSB) for RM420 million.
DGSB will pay RM294 million cash and the balance RM126 million through the issuance of new cumulative redeemable non-convertible preference shares at an issue price of RM1 in DGSB.
Subsequently, Paramount will lease back the properties from DGSB. The terms of the master lease agreement are being finalised.
In a filing with the stock exchange, Paramount told Bursa Malaysia that it had entered into three agreements for the sale of two premises of KDU Penang University College Campus in GeorgeTown and Batu Kawan as well as Utropolis Glenmarie Campus in Shah Alam for RM50 million, RM120 million and RM250 million, respectively.
The proposed transaction will not give rise to any gains accruing to Paramount as it will be undertaken via a securitisation exercise whereby the control of the campus will remain with the group.
DGSB was incorporated as the special purpose vehicle for the purpose of the securitisation exercise. Its sole shareholder is Asia International Trust Bhd.
DGSB will finance the acquisition through the issuance of medium-term notes of up to RM300 million, and also grant a call option in favour of Paramount. Paramount will grant a put option in favour of DGSB for the purpose of acquiring the campuses at the then prevailing market value.
Of the cash proceeds of RM294 million, Paramount said some RM191.5 million will be used for financing/refinancing of borrowings and RM100 million for partial redemption of private debt securities. As at end-September 2018, its total borrowings and PDS amounted to about RM913.24 million and RM200 million, respectively.
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