KUALA LUMPUR (Jan 9): Kumpulan Perangsang Selangor Bhd (KPS), controlled by the Selangor government, is planning to divest a 50% stake in Kaiserkorp Corp Sdn Bhd to AI Dream (HK) Ltd for some RM265.48 million cash.
KPS currently holds a 60% stake in Kaiserkorp.
Kaiserkorp wholly owns King Koil Licensing Co Inc, the US-based owner of the King Koil mattress brand. In May 2016, KPS acquired a 60% stake in Kaiserkorp for US$28.8 million or RM116.66 million. AI Dream, meanwhile, is wholly-owned by AI Dream 3 (Cayman) Ltd.
In a filing with Bursa Malaysia on Tuesday, KPS said the group, its wholly-owned subsidiary Bold Approach Sdn Bhd and Yeoh Jin Hoe, who is a director and shareholder of Kaiserkorp, had entered into a conditional share sale agreement with AI Dream for the proposed divestment. Under the deal, Yeoh, on his part, will divest his 30% equity interest in Kaiserkorp to AI Dream, leaving him with a 10% stake after the divestment.
KPS said the sale consideration will only be determined once the audited consolidated financial statements of Kaiserkorp for the financial year ended Dec 31, 2023 are made available to AI Dream by Feb 29, 2024.
"The sale consideration will be settled in US dollars and therefore, if and when converted into ringgit, may be impacted by any adverse fluctuation of the currencies. This may impact the actual amount of the sale consideration when translating into ringgit terms," it added.
But assuming the sale consideration is computed based on the latest unaudited consolidated financial statements of Kaiserkorp for the nine-month period ended Sept 30, 2023, the provisional sale consideration for Bold Approach's 50% equity interest in Kaiserkorp is RM265.48 million.
KPS said the proposed divestment will allow the group to recognise an estimated gain of RM117.43 million, and generate a return on investment of 272.19%.
In August last year, KPS received a letter of interest from AI Dream to acquire equity interest in Kaiserkorp held by Bold Approach. KPS had since then commenced various discussions and negotiations with AI Dream in respect of the transaction, as well as sale consideration for the equity interest in Kaiserkorp.
AI Dream then offered to acquire 50% equity interest in Kaiserkorp from Bold Approach, and 30% equity interest in Kaiserkorp from Yeoh, for a sale consideration to be determined from the base amount of US$100 million.
KPS said it intends to use more than 70% of the RM265.48 million proceeds raised from the proposed divestment to repay borrowings, 19% for working capital, and about 9% to distribute to its shareholders as a special dividend. The rest will be used to pay expenses for the proposed divestment. KPS' total outstanding borrowings, excluding Kaiserkorp, stood at RM445.91 million as at end-September 2023.
"The proposed repayment of such borrowings will enable the KPS group to achieve better financial flexibility, thus allowing the group to be able to deploy or reallocate its funds more efficiently as and when the need arises in the future," it added.
As for the proposed special dividend, it intends to declare an amount not more than RM24.2 million, said KPS. For illustrative purposes, the special dividend represents approximately 4.5 sen per share based on the total number of issued shares of KPS of 537.39 million shares as at Jan 2, 2024.
"If the actual number of issued KPS shares is higher than 537.39 million on the announcement of the entitlement date of the special dividend, then KPS will consequentially reduce the special dividend per share to achieve the intended amount of RM24.2 million," it added.
KPS said the proposed divestment will provide an opportunity for the group to monetise its investment in Kaiserkorp but still continue to benefit from the financial performance of Kaiserkorp, with minimal exposure to the latter's businesses and operations risk through Bold Approach’s remaining 10% equity interest in Kaiserkorp.
Earlier in October 2022, KPS divested its entire 100% equity interest in Sistem Penyuraian Trafik KL Barat Sdn Bhd to Amanat Lebuhraya Rakyat Bhd, which saw it recognise a one-off gain of RM128.7 million.
The proposed divestment is subject to the approval of KPS shareholders to be obtained in a forthcoming extraordinary general meeting.
RHB Investment Bank Bhd has been appointed as the adviser to KPS for the proposed divestment, which is expected to be completed by the first quarter of 2024.
KPS’ single largest shareholder is Selangor state-owned Darul Ehsan Investment Group Bhd, with a 57.88% stake, while Perbadanan Kemajuan Negeri Selangor holds 5.52%.
KPS shares closed down 2.5 sen or 2.91% at 83.5 sen on Tuesday, giving it a market capitalisation of RM448.7 million. The stock has risen 21% over the past one year.