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JCorp still hoping to privatise QSR, KFC

PUTRAJAYA: Johor’s state investment arm Johor Corp (JCorp) and CVC Capital Partners Asia III are still pursuing the privatisation of QSR Brands Bhd and KFC Holdings (M) Bhd.

In December 2011, JCorp and CVC Capital, via Massive Equity Sdn Bhd, announced their intention to buy QSR shares at RM6.80 each and RM3.79 per warrant. They also offered RM4 per KFC share and RM1 per warrant.

“This is a complex buyout. It has taken longer than we anticipated as there are many parties involved. We need to abide by listing rules as it involves three listed entities; QSR Brands Bhd, KFC Holdings Bhd and Kulim (Malaysia) Bhd,” said president and chief executive officer Kamaruzzaman Abu Kassim.

JCorp owns 55.9 per cent of Kulim, which in turn has a 53.9 per cent stake in QSR. KFC is a 51 per cent unit of QSR.

“The discussion is very much in progress. Unless and until a definitive agreement is signed, then only the various extraordinary general meetings can be called for the respective shareholders to vote on,” he told reporters at a media briefing here yesterday. “We hope to seal the definitive agreement soon … God willing, by this year,” he added.

Asked if the United States-based Yum! Brands Inc, the licensor and owner of the KFC and Pizza Hut brandnames is happy with the privatisation plan, Kamaruzzaman replied, “They understand our proposal and are assured of further growth in the business. In fact, Yum! Brands sees this region as one of their most profitable.”

“We entered the quick service restaurants business in 2006 (through Kulim’s investment in QSR) and since then, there has been tremendous growth in revenue and profits,” he said. “There is room for growth as this business stretches beyond Malaysia, Brunei and Singapore to Cambodia and India,” he added.

To another query on JCorp’s financial health, Kamaruzzaman replied: “Our debt to asset ratio is 0.72 times. The market no longer speculates on JCorp’s solvency.”

He went on to say JCorp will issue a RM3 billion sukuk wakallah with maturities stretching from five to 10 years to redeem existing bond obligations amounting to RM3.2 billion, which will expire on July 31, 2012. “This is not a re-financing move, it will be a new issuance. There will be a public offering through a book building process. We hope to issue the first tranche of the Sukuk Wakallah next month,” he said.

Asked if part of the proceeds of the new sukuk issuance would go to finance the privatisation of QSR and KFC, Kamaruzzaman replied, “No, the privatisation is an independent exercise. It doesn’t affect our impending sukuk issuance.”

JCorp performed very well last year, raking in RM1.1 billion in net profits on RM7.8 billion revenue. “Our sterling results were contributed by improved earnings in plantation, healthcare, property, food and intrapreneur ventures.”

Oil palm plantings make up 58 per cent of JCorp’s profits. In view of strong crude palm oil prices trading at around RM3,500 per tonne, Kamaruzzaman said JCorp was confident of sustaining its strong profits this year.

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