PETALING JAYA: Gagasan Nadi Cergas Bhd is buying the entire stake in Konsortium PAE Sepakat Sdn Bhd (KPS), a polytechnic hostel asset concessionaire, for RM158 million cash.
The group told Bursa Malaysia that it had entered into a conditional share sale agreement with P.A.E Builders Sdn Bhd and Seri Delima Anggun Sdn Bhd for the acquisition.
Gagasan said the funding for the acquisition will be partially met via the establishment of a proposed issuance of Islamic medium-term notes programme of RM200 million in nominal value, as well as a RM60 million convertible sukuk programme.
KPS holds concession agreements with the Malaysian government for seven polytechnic hostels in six states nationwide, entailing design, construction and facilities management.
The construction of the hostels were completed and handed over in 2016 and it is currently maintained by KPS under the concession agreement till Sept 25, 2035.
For the 2018 financial year, KPS recorded a profit after tax of RM15.3 million with RM234.5 million in net assets. The purchase sum of RM158 million represents a 32.6% discount to its net assets.
Gagasan is mainly dependent on the recurring income streams from its two current tertiary hostel maintenance concessions in Kuantan and Malacca.
“As such, the proposed acquisition will create earnings sustainability for the group, in light of the enlarged long-term recurring income base,” it noted.
The proposed acquisition also allows Gagasan to be entitled to the future cash flow streams from the seven concession agreements over the remaining tenure period.
It will allow the group to extend its in-house facilities management services to the seven polytechnics hostels.
Trading in Gagasan shares was suspended today pending the material announcement. The stock was last traded at 25 sen.
source https://www.thesundaily.my/business/gagasan-nadi-buys-hostel-concession-assets-for-rm158m-MF1546824
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