KUALA LUMPUR (Aug 30): Media Prima Bhd will dispose of one piece of land and three properties in Bangsar and Shah Alam, to PNB Development Sdn Bhd for a total cash consideration of RM280 million, resulting in a one-off net gain of about RM127.7 million, according to a filing with Bursa Malaysia.
The filing with Bursa said that New Straits Times Press (M) Bhd (NSTP), a 98.2%-owned subsidiary of Media Prima, entered into three separate conditional sales and purchase agreements with PNB Development for the proposed sale of the properties.
“The MPB (Media Prima) group is expected to realise a one-off net gain (after RPGT and estimated incidental expenses for the proposals) arising from the proposed sale of approximately RM127.73 million,” it said, adding that earnings per share (EPS) is expected to increase by 10.67 sen per share based on the group’s latest audited consolidated financial statements for the financial year ended Dec 31, 2017 (FY17).
The four properties are two pieces of freehold land in Bangsar where its Balai Berita headquarters is located, a piece of freehold industrial land with buildings erected in Shah Alam where its printing plant is located, and another piece of freehold industrial land also in Shah Alam.
It noted that the properties in Bangsar will be sold for a cash consideration of RM118.7 million while the property in Shah Alam will be sold for a cash consideration of RM127.9 million. The vacant land in Shah Alam will also be sold for a cash consideration of RM33.4 million.
A condition under the sales and purchase agreement for the Bangsar and Shah Alam property will require NSTP and PNB Development to enter into two separate tenancy agreements, which will commence immediately after the completion of the SPAs.
The proposed tenancy will see NSTP rent the properties from PNB Development for three years at RM720,082 per month for the Bangsar property and RM660,326 per month for the Shah Alam property. The term of the tenancy will automatically be extended for another term of three years following the expiry of the initial term.
The sale consideration represents a discount of about 8.35% from the market value for the three properties based on an assessment by the company’s appointed independent valuer, Jones Lang Wootton (JLW).
“The group believes in the potential inherent in the new media landscape. In 2016, the group had embarked on its transformation journey to become the leading digital-first content and commerce company. With that aim, one of the initiatives is to strengthen the group’s resources in order to gear up for the future by unlocking certain assets for value,” it said.
It noted that the proposed sale is an avenue for Media Prima to raise funds for the group by realizing the value of the sale properties, while the proposed tenancy provides the group with certainty that the ongoing business operations will not be disrupted.
“With at least six years tenure under the proposed tenancy, the group is able to continue operating its headquarters at Balai Berita Bangsar which is located on the Bangsar property and its printing plant located on the Shah Alam property,” it added.
The group intends to use the net proceeds from the proposed sale of RM271.6 million and its internally generated funds of RM8.40 million to repay in full the entire outstanding amount under its existing term loan granted by a financier to Media Prima, within three months from the receipt of the sale consideration.
The filing with Bursa also highlighted that the redemption of the term loan is expected to reduce its gearing position and contribute to interest savings of about RM22.2 million per year based on an effective interest rate of 7.92% per year. A total savings of RM9.98 million per year is expected for Media Prima after taking into account the interest savings and annual depreciation of the tenanted properties of about RM4.36 million against the annual rental for the tenanted properties of about RM16.56 million.
At closing, Media Prima shares were down 0.5 sen or 1.2% to 41 sen with about 982,100 shares traded, giving it a market capitalisation of RM454.8 million.