JCORP: MAKES NO SENSE TO SELL OUR CORE BUSINESS

JOHOR BAHRU. Dec 27: Johor Corporation says it has no plans to sell its prized assets, QSR Brands Bhd and KFC Holdings (M) Bhd, which are held through its subsidiary Kulim (M) Bhd.

"QSR and KFC are not for sale.  We had entered the quick service restaurants business in 2006 and since then have seen tremendous growth in revenue and profit before tax (PBT) at an average of 13.8% and 3.7% per annum respectively."

“The results from this segment had contributed significantly, making up 47.5% percent and 44.1 percent respectively to Kulim’s revenue and PBT in the financial year period ending 2009.  It does not make sense to sell our core business,” said JCorp’s President and Chief Executive Kamaruzzaman Abu Kassim.

JCorp has a number of prized assets within the group, though it doesn't own most of these assets directly. JCorp owns 53% of Kulim, which holds 57.5% of QSR. QSR in turn owns 50.6% of KFC.

He reiterated that QSR and KFC remained valuable and strategic assets for JCorp and this stance is consistent with Kulim and QSR bursa announcements made on November 29 that it wanted to keep theses assets within the JCorp stable.

“As rightly highlighted by the market, these are our prized assets.  It would not be a wise business decision to let go of a profitable “cash business” as we would be hard pressed to seek alternative investments that provide similar or better returns.

For the QSR’s business, there is a significant growth upside in the halal food industry estimated to exceed RM7 trillion a year to cater to Muslims estimated at 1.8 billion of the world’s population.

"Commercially, the Islamic consumer market is the fastest-growing in the world. The halal marketplace is emerging as one of the most lucrative and influential arenas in the world today, and KFC wants to ride on this growth.

"Both QSR and KFC will continue to remain strategic entities within JCorp, as well as a growth catalyst for Kulim and JCorp,” said Kamaruzzaman.

He went on to say this should arrest any further speculation that JCorp had any intention of selling its strategic assets such as QSR Brands that owns KFC Holdings to meet debt obligations.

As to JCorp’s RM3.6bil debt which is due on July 31 2012, Kamaruzzaman said there is already a programme to address this issue and will be executed as part of JCorp’s transformation.

“CIMB Bank and Maybank have been appointed our financial advisors and both these banks are our biggest lenders, owning the bulk of the RM3.6 billion bonds that are due in 2012,” he added.

“Our debt obligations are manageable and we have no problems in meeting them. As such, speculation of our intention to sell our prized assets is mooted by people with malicious intent,” he said in dismissing speculation that JCorp may sell QSR and KFC to finance the debt.