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KPJ TO SELL PROPERTIES FOR RM305.9M

The Edge Daily - Hospital operator KPJ Healthcare Bhd plans to dispose of eight properties to Al-’Aqar KPJ REIT for RM305.9 million to pare its debt and finance its capital needs.

20-08-2008

KUALA LUMPUR : Hospital operator KPJ Healthcare Bhd plans to dispose of eight properties to Al-’Aqar KPJ REIT for RM305.9 million to pare its debt and finance its capital needs.

In a statement to Bursa Malaysia yesterday, KPJ said the properties included the group’s seven hospitals and a nursing and health sciences college in Malaysia.

The seller will receive as payment RM189.03 million cash and 123.03 million new units in Al-‘Aqar. Post disposal, KPJ will have an effective interest of about 55.7% in Al-‘Aqar.

The list of properties to be sold to the property trust include the Seremban Specialist Hospital, Taiping Medical Centre, Kota Kinabalu Specialist Hospital, Bukit Mertajam Specialist Hospital and KPJ Penang Specialist Hospital.

KPJ said proceeds from the disposal would be used to repay its bank loans of RM157.09 million as at Dec 31 last year. This will result in interest savings of about RM10 million a year for the company.

“The estimated capital gain to the KPJ group is expected to be approximately RM14.61 million. The interest savings and reduction of the loan will contribute positively to the future earnings and cash flows of the KPJ group.

“The consideration units received by KPJ pursuant to the proposed disposals are for investment purposes. However, in the event of good investment opportunities, the company may sell the consideration units to strategic investors or partners to retain KPJ group’s interest in Al-‘Aqar at below 50%, depending on market condition,” KPJ said.

KPJ booked higher earnings in the second quarter ended June 2008. In a separate statement, it said net profit rose 40.8% to RM20.18 million from RM14.33 milion a year earlier as its existing and newly-acquired hospitals secured more business.
Revenue climbed 19.7% to RM310.34 million from RM259.33 million.

First-half net profit jumped 62.6% to RM41.88 million from RM25.75 million a year earlier as revenue advanced 19.22% to RM615.07 million from RM516.21 million. The firm has proposed an interim dividend of 7% less tax.

Shares of KPJ and Al-‘Aqar have outperformed the broader market this year. KPJ dipped 2 sen to RM3.38 yesterday for a year-to-date decline of 2.31% compared with the Kuala Lumpur Composite Index’s 25.99% drop. Al-‘Aqar which ended 3 sen lower at 87 sen has lost 10.31% so far this year.



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