PARKSON (5657) - Parkson to sell interest in China unit

This article first appeared in The Edge Financial Daily, on September 14, 2016.

KUALA LUMPUR: Parkson Holdings Bhd is disposing of its interest in an indirect wholly-owned China subsidiary along with the relevant shareholders’ loan which it says will boost its current year earnings by RM300 million.

Parkson said the transaction involved its 54.67%-owned Hong Kong-listed subsidiary Parkson Retail Group Ltd, selling off its entire equity interest in wholly-owned China unit Beijing Huadesheng Property Management Co Ltd and the relevant shareholders’ loan.

The purchasers are Shenzhen Qianhai Tulan Investment Centre (LLP) and Shanghai Changkun Investment Management Co Ltd.

Parkson said following the disposal, the group’s earnings for the financial year ended June 30, 2017 (FY17) will be higher by some RM300 million or 28 sen a share, while its net assets based on the audited consolidated statement of financial position as at June 30, 2015 will be higher by about RM300 million.

The transaction, which is subject to the approval of Parkson retail shareholders, is expected to be completed in FY17, the group said in its filing with Bursa Malaysia.

Parkson said the disposal is based on the total equity consideration of a fixed amount of 1.67 billion yuan (RM1.03 billion), the aggregate amount of cash and bank balance as shown in the accounts of Beijing Huadesheng, as at handover completion date, and an amount equivalent to the advanced rental taxes refunded by Chinese authorities to the disposal company.

Shenzhen Qianhai has also agreed to acquire the sale loan from Parkson Retail at the loan consideration upon the terms and consideration of the agreement, said Parkson.

The loan consideration in the amount of 649.7 million yuan was determined after an arm’s length negotiation between Parkson Retail and Shenzhen Qianhai as well as Shanghai Changkun, it said.

Parkson said the transaction will not have any effect on its issued and paid-up capital and the substantial shareholders’ shareholding in the group.

PARKSON (5657) - Parkson to sell interest in China unit