KUALA LUMPUR (June 30): Pelikan International Corp Bhd (PICB) is disposing of its stake in Pelikan Group GMBH (PGG) — whose subsidiaries produce and distribute stationery and office products throughout Europe, Latin America, the Middle East and Asia — for €136 million or RM695.44 million in cash to Holdham SAS.
In a bourse filing on Friday, PICB said the company and its subsidiaries Pelikan Holding AG (PHAG) and MOLKARI Vermietungsgesellschaft mbH & Co Objekt Falkensee KG (Molkari), and Pelikan PBS-Produktion Verwaltungs-GMBH (PBS) had entered into an agreement with Holdham to dispose of their entire equity interests in PGG.
This confirms a report by The Edge on Friday morning.
PHAG will also be selling its entire limited partnership interest in Pelikan PBS-Produktionsgesellschaft mbH & Co KG (PPG) and all of its equity interest in PBS to the purchaser for €1 each.
Meanwhile, Holdham will also be assuming the debts of €15.4 million owed by PICB to PGG and the €16.38 million owed by PHAG to PPG.
PICB will hold an EGM for shareholders to vote on the disposal and the proposed capital repayment. Shareholders holding at least 75% of the totalled issued shares must approve of the proposals.
PICB also said it will use RM182.71 million of the RM695.44 million as working capital and settlement of liabilities, repayment of bank borrowings, and to cover estimated expenses from the proposed exercise.
This leaves RM512.72 million that it will distribute within six months from the completion of the sale — which will take place no later than Oct 31, 2023 — via a special dividend and/or a capital repayment.
For illustrative purposes, the cash distributed via a special dividend to entitled shareholders will tentatively be 10 sen per share amounting to RM60.32 million, while the cash distributed via the proposed capital repayment will be estimated at 75 sen per share amounting to RM452.4 million.
The capital repayment will be implemented through a reduction of its existing share capital and will not result in a cancellation of shares, and a change in the number of or proportion of shares held by any shareholder.
According to PICB, the disposal will enable it to unlock and realise the value of its investment at an attractive valuation, and will enable its shareholders to also realise their investments partially in cash.
The price and assignment of debt represented an implied enterprise value (EV)/Ebitda of about 9.63 times, and an implied price-to-earnings ratio of 26.8 times.
Moreover, the group has faced challenges in terms of keeping up with the latest manufacturing technologies and distribution practices for its stationery business, while the growth of office stationery has also been hampered by the increased use of computers, tablets, smartphones and other digital solutions.
“The global economy has also had a significant impact on its overall business. In years of economic downturn, as the business turnover gets under pressure, shrinking its contribution margin, the challenge of managing and covering the overall fixed costs becomes greater. Reorganisations and cost saving measures are temporary measures to address current downturn and not a long-term effective approach especially when the economy upturns.”
Following the sale of its stationery business, PICB said it may be classified as a cash company in accordance with the listing requirements of Bursa Malaysia.
“The company will make the appropriate announcements on any material developments in respect to the acquisition of the new businesses and/ or assets pursuant to the listing requirements and obtain its shareholders’ approval at an EGM to be convened, if required,” it said.
At the time of writing, PICB’s shares slipped two sen or 2.34% to 83.5 sen, for a market capitalisation of RM507.79 million. Year to date, however, the share has more than doubled from 37.5 sen.