KUALA LUMPUR (July 18): Menang Corp (M) Bhd has proposed to dispose of its 51% stakes in two units for RM43.5 million.

The stakes in Rumpun Positif Sdn Bhd and Protokol Elegan Sdn Bhd are held by Menang via its wholly-owned subsidiary Menang Development (M) Sdn Bhd (MDSB).

In an exchange filing today, Menang said MDSB is selling the Rumpun Positif stake to Liberal Gains Sdn Bhd for RM26 million.

Rumpun Positif is the developer of Universiti Teknologi Mara’s (UiTM) Puncak Alam campus under a 23-year concession agreement signed in April 2012. Under the deal, the company will maintain the campus, which was completed in October 2015, over the lease period of 20 years to UiTM and the government, in exchange of monthly payments of RM4.06 million.

The company is loss-making for a second consecutive year now, registering a loss after tax of RM16.19 million for the year ended June 30, 2017 (FY17). It also has borrowings totaling RM291.04 million and a gearing ratio of 5.86 times.

As for the Protokol Elegan stake, MDSB is selling it to Key Transmark Sdn Bhd for RM17.5 million.

Under a separate 23-year concession agreement with UitM and the government, Protokol Elegan is principally engaged in the development and maintenance of UiTM’s Nilai Training Centre, in exchange for payments of RM1.67 million per month.

The company made a profit after tax of RM1.76 million in FY17, while borrowings stood at RM100.42 million.

Of the RM43.5 million proceeds, Menang said RM20 million will go to the repayment of bank borrowings, RM17.8 million for working capital requirements, RM5 million set aside for future development, and the balance to pay off expenses of the proposals.

Menang said the disposals provide the group with an opportunity to “monetise its matured concession assets at an attractive pricing”.

At the same time, it  will help strengthen its financial positions, lower gearing position, and free up further cash resources for working capital requirements and its property development division.

In addition, the proposals are also undertaken after taking into consideration that it will allow the group to enhance its earnings with an immediate net gain on disposal of some RM7.67 million, which will translate into a consolidated earnings per share of 1.6 sen for FY17, it added.

The group’s gearing ratio is also expected to be reduced to 0.9 times, from 2.21 times as at end-June, 2017.

The proposals — which are subject to government and shareholder approvals and are inter-conditional upon one another — are expected to be completed by the first quarter of 2019, barring unforeseen circumstances.

Shares in Menang Corp fell three sen or 5.61% to 50.5 sen  today, valuing the property developer-cum-construction company at RM242.8 million.