Zecon to sell 49% stake in hospital concession for RM155mil

During the quarter in review, the car distributor registered a net profit of RM32.82mil compared with RM19.43mil in the corresponding period last year. Consequently, its earnings per share jumped to 8.4 sen from 4.97 previously

KUALA LUMPUR: Zecon Bhd, which has requested for a suspension of trading in its shares pending a material announcement, disclosed on Monday its plan to dispose of a 49% stake in wholly-owned Zecon Medicare Sdn Bhd for RM155mil in cash.

However, “due to unforeseen circumstances, the planned signing of the agreement relating to (this) material transaction and its subsequent announcement during the suspension period has been delayed to a date to be determined later,” the construction and property development group told Bursa Malaysia.

A detailed announcement on the said transaction would be made in due course after the agreement had been signed, it said, noting that the price was tentative.

Zecon Medicare holds a 30-year asset management service concession for a children’s specialist hospital being built at Universiti Kebangsaan Malaysia (Hospital Pakar Kanak-Kanak, UKM). The hospital, which is being built at a cost of RM606mil, is expected to be completed in November next year.

Zecon did not give any reason for the delay in the signing of the proposed 49% stake, the timeframe it expected to do so, or the rationale for the share disposal.

However, in its latest annual report, Zecon had said the group’s profit before tax fell by almost half (48%) to RM54.1mil for the year ended June 30, 2017, partly due to the high financing costs of  the hospital project being implemented on a private finance initiative concept.

The regeneration of positive cash flows would only occur during the post-completion period, thus resulting in the group experiencing high finance cost due to the direct impact of a large borrowing amount .

In its statement on Monday, Zecon said trading in its shares, suspended since 2.30pm last Friday, would resume at 9am on Tuesday.

Its share price has climbed 43% since early last month to 79.5 sen (last price prior to the suspension).