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Malaysia Inc‎ > ‎Johor Corporation‎ > ‎

JCorp quashes sale, debt rumours

Business Times (28 December 2010)

Investors and analysts are positive on Johor Corp's move to keep its lucrative fast-food business


Johor Corp (JCorp) has moved to defuse tension with its former chief executive officer (CEO), quashing speculation that it planned to sell its fast-food business due to debt problems.

The news appeared to have pushed up shares of Kulim (M) Bhd, which owns QSR Brands Bhd and KFC Holdings (Malaysia) Bhd (KFCH), by 1.1 per cent to RM12.74 yesterday as investors were relieved that the group would keep the lucrative business.

Analysts were positive on the announcement.

One analyst, who declined to be named, said the stock gained as investors felt more secure with the statement from JCorp.


"The move to keep the two cash cows and refinance JCorp's existing debt is a good move for the group in the long term," he said.

Last week, former CEO Tan Sri Muhammad Ali Hashim said there were parties that wanted him out of JCorp so they could strip the group of its assets.

Yesterday, JCorp's new president and chief executive Kamaruzzaman Abu Kassim said speculation of a plan to sell the two assets was mooted by people with malicious intent.

"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," he said in a statement.

JCorp holds a controlling 53 per cent stake in Kulim, a plantation group. Kulim in turn owns 57.5 per cent of QSR, which holds a 50.6 per cent stake in KFCH.

Johor Menteri Besar, who is also JCorp chairman, Datuk Abdul Ghani Othman, said JCorp is committed to protecting its investment in QSR and KFCH.

"The issue of selling JCorp's stakes in these two companies has never arisen at the board level. It is not true," he said in a briefing in Labis, Johor.

JCorp entered the quick-service restaurant business in 2006. Since then, its revenue and profit before tax have grown by an average of 13.8 per cent and 3.7 per cent a year, respectively.

There is also a plan to deal with its RM3.6 billion debt which is due on July 31 2012. The group has hired CIMB Bank and Maybank as financial advisers.

Both banks are also its biggest lenders, owning the bulk of the RM3.6 billion bonds.

"Our debt obligations are manageable and we have no problems in meeting them," Kamaruzzaman said.

Rumours about JCorp and its financial health have swirled in the market since the middle of the year and gathered pace after the departure of Muhammad Ali.

In November, Kulim received takeover bids from local tycoon Tan Sri Halim Saad and US-based private equity group Carlyle. Halim offered RM5.60 per QSR share while Carlyle bid RM6.70 a share.

Halim then partnered KUB Malaysia Bhd and matched Carlyle's offer.

Kulim, however, rejected the offers, stating that QSR and its subsidiaries were experiencing robust growth and its board believes that more value can be realised in the long term.

Shares of QSR closed unchanged at RM5.39, while those of KFCH fell 3 sen to RM3.80 yesterday.