Jcorp bonds to be govt-guaranteed
PETALING JAYA: Johor Corp (Jcorp), the asset-rich but debtladen state investment arm, has received the green light from the Government to issue up to Rm3bil in governmentguaranteed bonds as part of its debt refinancing plan, sources said.
The sources said that the bonds would be issued “soon” by its arrangers CIMB and Maybank, well in time to meet the July 31 deadline when Rm3.6bil of Jcorp’s existing bonds mature.
Aside from having a government guarantee, the new bonds will be backed by assets owned by Jcorp, worth the same amount as the bonds to be issued. This includes Jcorp’s 56% stake in Kulim (M) Bhd (which itself has a market value of Rm3bil based on Kulim’s current share price) as well as other real estate and plantations in the southern state that is directly owned by Jcorp.
“The bond issuance will clear up doubts about the finan-
cial health of Jcorp. The group is clearly on the mend with some interesting proposals already announced,” said one investment banker.
Jcorp is to receive a further Rm700mil from the sale of palm oil plantations to Kulim, a deal that was recently approved by Kulim shareholders.
In a January question-and-answer session by Bernama with Johor Mentri Besar and Jcorp chairman Datuk Abdul Ghani Othman, he had said that the Rm700mil cash accruing from the estate sale “is the first part of the expected Rm1bil cash to be generated for debt repayment prior to July 31, 2012. The balance of Rm300mil will come from internally-generated funds. As for the remaining Jcorp debt obligations, we are finalising the repayment plan with advice from CIMB as our advisor. As part of the exercise, CIMB and Maybank will act as joint lead managers for the issuance of new bonds in 2012.”
Jcorp was also in the news recently for its buyout proposal of one of its prized assets in its stable of companies, namely KFC Holdings (M) Bhd (KFCH).
Jcorp said that as part of a restructuring plan it would take private its subsidiaries QSR Brands Bhd and KFCH.
Jcorp is partnering private equity fund CVC Capital Partners Asia Pacific (CVC) to buy plantation firm Kulim Malaysia Bhd’s entire stake in QSR and KFCH. A special purpose vehicle called Massive Equity Sdn Bhd has been formed to carry out the exercise.
The acquisition will allow Jcorp to flatten its vertical corporate structure and reduce its multiple listings, which in turn would result in better governance and greater operational efficiency. It is understood that Jcorp has plans to improve KFCH’S operations and stop the leakages to improve its cash flow, a move that may entail it bringing in a new management team.
Jcorp owns 56% of Kulim, which owns a 57% stake in QSR. The latter, in turn, owns 50.6% of KFCH.