CIMB

Khazanah Nasional to sell Parkson stake

PUBLISHED : Thursday, 06 March, 2008, 12:00am
UPDATED : Thursday, 06 March, 2008, 12:00am

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Khazanah Nasional, the investment arm of the Malaysian government, plans to sell its entire stake in mainland department store operator Parkson Retail Group through a share placement and convertible bond sale, sources familiar with the situation said.

Khazanah is offering eight million Parkson shares at HK$70 to HK$72.30 each, an up to 8 per cent discount to the stock's close of HK$76.10 yesterday, according to a sale document obtained by fund managers.

It is also selling US$543 million in three-year bonds with a 2.89 per cent interest rate that can be swapped for Parkson shares.

The conversion price would range between a 32 and 37 per cent premium over the final pricing of the share placement, another source said.

The size of the bond sale could increase to US$576 million if demand warrants.

Deutsche Bank, UBS and Malaysian investment bank CIMB are joint bookrunners for the share placement.

'Orders for both tranches were well covered three hours after they were launched for Asian investors although the book will stay open for the European market,' a source said.

'Half of the orders were placed by long funds (those with only long positions on shares) while the remainder came from hedge funds and private investors.'

According to the document, proceeds from the share sale would be used for general corporate purposes related to Khazanah's principal business activities.

Khazanah paid HK$540 million for its Parkson stake during the retailer's Hong Kong listing in 2005, from which HK$1.6 billion was raised.

It was a rare investment by Khazanah reflecting its good relationship with Parkson's management.

Parkson operates and manages 41 stores in 26 mainland cities. It posted a 46.7 per cent increase in net profit for last year to 676 million yuan (HK$741.52 million).

Wall Street bank Goldman Sachs raised its target price for Parkson to HK$89.60 from HK$85.80, and maintained a 'buy' recommendation after the company's annual result exceeded expectations.

PRG Corp, Parkson Retail's largest shareholder, cashed in HK$629.3 million by offering eight million shares in a placement in early January.