Turnaround plan in store for Masterskill
14.01.15 / Author: Supriya Serendran
KUALA LUMPUR: SMRT Holdings Bhd and Creador II LLC plan to turn around ailing Masterskill Education Group Bhd, which has been loss-making for the past two years. They have proposed a RM112 million acquisition of Masterskill’s major shareholder and executive direction Siva Kumar M Jeyapalan’s 30.75% stake in the company.
Creador founder and chief executive officer (CEO) Brahmal Vasudevan said he is confident that by combining Creador’s expertise in strategy and financials with SMRT’s experience in education sector, they would be able to turn around Masterskill’s operations – and have the group break even – within a year.
“We see more upsides than downsides in this transaction. We plan to rename Masterskill as Asiamet Education Group Bhd and focus on building a new chapter and bringing new life into the company. We also intend to maintain its listing status on Bursa Malaysia,” he told reporters yesterday.
SMRT and Creador, through their respective subsidiaries Strategic Ambience Sdn Bhd (SASB) and Arenga Pinnata Sdn Bhd (APSB), entered into a share sale agreement to acquire Siva Kumar’s 30.75% stake in the company at a cash offer price of 60 sen per share.
Under the agreement, APSB will buy a 7.75% stake from Siva Kumar while the remaining 23% will be taken up by SASB, subject to SMRT’s shareholders’ approval. The acquisition is expected to be completed by end-March this year. APSB has also made a conditional takeoffer offer of 60 sen per share for the remaining 49.98% shareholdings it does not own.
Combined with APSB’s current stake of 19.26% in SMRT, the purchase of Siva Kumar’s stake will result in Creador and SMRT becoming controlling shareholders of Masterskill with a 50.02% stake.
“We will provide the minority shareholders an option to accept [conditional takeover offer], or to participate in the future growth of company,” said Brahmal.
The education business is not uncharted waters for SMRT as the company owns Cyberjaya University College of Medical Sciences (CUCMS), which it has turned around since its acquisition in May 2013.
Besides education services, SMRT is also involved in human resource services. For its financial year ended Dec 31, 2013 (FY13), SMRT reported a net profit of RM8.2 million on revenue of RM52.3 million. For the nine months ended Sept 30, 2014 (9MFY14) the company raked in a net profit of RM6.8 million on RM90.3 million in revenue.
SMRT chairman Datul Dr R Palan said there are plans to unlock synergies that could save costs between Masterskill-owned Asia Metropolitan University (AMU) and CUCMS.
The new shareholders will bring prominent figures from the education industry onto Masterskill’s board, like former Education Ministry secretary-general Tan Sri Dr Zulkernain Awang and Universiti Sains Malaysia pro-chancellor Tan Sri Dr M Jegathesan.
On whether Siva Kumar will remain as an executive director after disposing of his shares, Palan said nothing has been decided at this point, although the former “has offered his experience and expertise”.
In a filing with Bursa Malaysia yesterday, SMRT said SASB will also enter into a management agreement with Masterskill to provide advisory and management support services. Additionally, SMRT will undertake a proposed placement of up to 10% of its issued share capital.