KUALA LUMPUR: Media Chinese International Ltd
(MCIL), through indirect unit Comwell Investment Ltd, has entered into a conditional agreement to sell its 73.01% stake in Hong Kong-listed One Media Group Ltd (KG) to a Chinese state-owned company, Qingdao West Coast Holdings (Internation) Ltd, for HK$498.06mil (RM257.86mil) in cash.
The publisher of Sin Chew Daily and China Press told Bursa Malaysia that the consideration represented a premium of about 21.54%, or HK$88.28mil (RM45.71mil), to the market value of the sale shares on the last trading day.
It estimated that it would recognise a gain of about HK$363.3mil (RM188.35mil), being the price less the net carrying value attributable to the sale shares as at March 31 and after deducting the estimated expenses and considering relevant accounting adjustments.
Trading in MCIL shares was suspended on the company’s request for the entire of last week pending today’s (Monday’s) announcement of the details of the share transfer agreement signed on July 22. The announcement required the approval and clearance from the Securities & Futures Commission of Hong Kong.
Trading resumed at 2:30pm today, with the counter closing at 76 sen for a 3-sen gain.
MCIL said through the proposed disposal of OMG -- which publishes Ming Pao Weekly in Hong Kong and other magazines in Hong Kong, China and Taiwan -- the company would realise its investment in OMG with the consideration at a premium to the market price of the shares for the past one year.
MCIL had originally invested HK$12.38mil (RM6.42mil) in the share capital of OMG (from 2005 to 2011).
In addition, the proposed disposal would raise funds for MCIL to, among others, partially repay bank and other borrowings. Of the gross proceeds of HK$498.06mil, it is setting aside HK$250mil (RM129.71mil) for this purpose and allocating HK$225mil (RM116.73mil) for general working capital and investment purposes, including the expansion of the group’s digital media business.
As at March 31, 2016, the group had total borrowings of about US$116.12mil (RM467.07mil). The partial repayment is expected to result in an interest saving of some HK$11.45mil (RM5.94mil) per year based on an effective interest rate of 4.58% per annum.
On the purchaser, MCIL said: “To the best of the directors’ knowledge, information and belief having made all reasonable enquiries, the purchaser is a company incorporated in the British Virgin Islands and the controlling company of the Purchaser is a Chinese state-owned enterprise.”
OMG had incurred pre-tax losses in the last two financial years (FY) ended March 31. For FY ended March 31, 2016, the group posted a pre-tax loss of HK$11.43mil (RM5.93mil) on turnover of HK$137.25mil (RM71.15mil).
MCIL expects the proposed share disposal to be completed by the fourth quarter of this year.
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