JCorp insists assets reshuffle will serve Bumi interests, lower debt

By Debra Chong

December 19, 2011

KUALA LUMPUR, Dec 19 — The Johor Corporation Bhd (JCorp) move to take direct control of its food-related businesses last week will serve Bumiputera interests and lower its overall debt despite claims to the contrary by a former chief executive, a company official said.

The official denied former CEO Tan Sri Muhammad Ali Hashim claims of outside forces, that he dubbed “Superman”, who were incurring more debts in the once-powerful Johor state investment company.

“This is a JCorp decision. The whole board fully consented to the restructuring programme,” the JCorp official told The Malaysian Insider, declining to be named as he was not authorised to speak to the media.

“JCorp will have enough money not just to pay off its debts but will be able to generate returns to JCorp directly,” he said.

The company official also said that its existing RM3.6 billion debt was lower than what it incurred during the Asian financial crisis in 1997-1998.

JCorp has partnered private equity fund CVC Capital Partners Asia Pacific (CVC), to buy plantation firm Kulim Bhd’s entire stake in QSR Brands Bhd (QSR) and KFC Holdings Malaysia Bhd (KFCH).

There have been several attempts to sell KFCH but Malay right-wing group Perkasa has objected, saying it should remain in Bumiputera hands. In 2010, there were two offers made by Tan Sri Halim Saad and The Carlyle Group to purchase QSR for RM5.60 and RM6.70 per share. However, they were rejected by both managements of QSR and its parent Kulim.

The official also stressed that CVC was “a very good partner” who has proven to add value to its local partners in Malaysia, which he said was more the bigger issue that money.

He rubbished allegations that JCorp was being manipulated by outside forces, stressing that the privatisation option had been raised at its board meeting since early this year.

“The allegations that the Bumiputera agenda will be displaced with the privatisation programme won’t happen with the restructuring,” he said.

JCorp recently appointed several new faces to two companies, Kulim and Damansara Realty Bhd. Among them were Datuk Zaki Zahid, who once served the Abdullah administration, and Wan Mohd Firdaus Wan Mohd Fuaad, who is special officer to Johor Mentri Besar and JCorp chairman Datuk Abdul Ghani Othman.

Muhammad Ali, who helmed the corporation for 28 years until July last year, said the “Superman” had seized control of the state-owned company and was directing the future of JCorp and its group of companies. He did not identify the “Superman”.

Muhammad Ali said a ‘Superman’ had seized control of the state-owned company. He did not identify the ‘Superman. — Picture courtesy of businessjihad.com

“This Superman’s hands are among the factors that caused JCorp to set aside the management’s original plan, to let go its assets and businesses that were less strategic, to resolve its debt,” he said in a statement on Saturday night.

But the JCorp official familiar with company’s restructuring plan told The Malaysian Insider that “JCorp has no intention to sell the state’s hold [in QSR and KCH]”.

“Through the restructuring programme, JCorp will own 51 per cent of the shares and CVC only 49 per cent. It all fits into JCorp’s plans,” he said.

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

In this week’s report by business daily, The Edge, JCorp and CVC bid to pay RM6.80 per QSR share and RM4 for every KFCH share.

The bid was made through Massive Equity Sdn Bhd, a special purpose vehicle, The Edge added.

Kulim has until Wednesday to decide whether to accept the bid but the JCorp official was confident the company will win the bid, adding that market reaction was “very good”.

Kulim’s shares rose to RM4.01, hitting a 52-week high when Bursa Malaysia closed on Friday. QSR shares closed at RM6.42 while KFCH stood at RM3.75.

“Restructuring to move a food company out of a plantations company has been well-accepted by Kulim shareholders,” he said.