JCorp ... Jan11

Johor Corp (JCorp) is considering selling various assets including some landbank, properties and plantation assets to partly repay its current RM3.6bil debt which is due for repayment in July 2012.

The state investment arm first plans to bring down the debt level of RM3.6bil to a “sustainable level” of between RM1bil and RM1.5bil following a debt restructuring exercise.

That would mean that it needs to raise at least RM2.1bil by 2012. About 70% (source of funding) for the RM2.1bil needed has already been identified and this includes selling some of its assets. The group has “saleable assets” of RM2.1bil.

The remaining 30% will come from sales from its stable of local and foreign assets. As for the assets available for sale, they may be grouped into three categories – plantation land, industrial land and commercial property while maintains that JCorp’s stakes in Kulim, QSR and KFC are not for sale.

JCorp does not rule out selling part of Kulim’s 50.75% stake in New Britain Palm Oil Ltd if the need arises.

JCorp's landbank and properties are largely in Johor and this includes up to RM2.5bil in commercial properties. As at March 2010, it had about 2,000ha to be developed in the Iskandar Malaysia region.

The group's remaining debt would be restructured via new loans or instruments.

JCorp has appointed CIMB Bank and Maybank Investment Bhd as advisors for the restructuring. Both banks are also the biggest lenders to JCorp which could probably mean that both banks own the bulk of the bonds due for maturity.

It has RM705mil in cash but a whopping RM6.62bil in debt and with hardly any free cash flow.

The RM3.6bil debt was due to JCorp's investment projects since 2000, “mainly in landed property and industrial areas”.

JCorp is the ultimate shareholder of the lucrative fast-food businesses of QSR and KFC Holdings (M) Bhd. Its interests in both companies are held through its 53%-owned subsidiary Kulim (M) Bhd, which main business is in the plantation sector.

Kulim owns a 57.5% stake in QSR, which in turn, owns a 50.6% stake in KFC.

As one of the country's largest state economic development authorities, JCorp has about 250 companies under its stable from which it currently derives RM90mil in annual dividend income.

There was a possibility some of these might be listed in the future. But the proceeds will not be to repay its current debt due for maturity. Among the businesses slated to be listed is EA Technique Sdn Bhd, a shipping company held by Sindora Bhd, Kulim’s 75.2% subsidiary.

There are also plans to sell assets to JCorp’s listed entities.

JCorp boasts a vast landbank comprising industrial, commercial and residential lands as well as hotel properties in Johor … valued at rm3.8 billion. JCorp plans to unlock the value or develop these lands to generate income for the group. Its close relationship with the state government to will be an added advantage.

JCorp also owns 11% of the land within the central business district in JB.

JCorp's other key assets apart from those in the recent limelight include private healthcare service provider KPJ Healthcare Bhd, property development companies Johor Land Bhd and Damansara Realty Bhd, intrapreneur venture business Sindora Bhd and the London-listed plantation company, New Britain Palm Oil Ltd (NBPO). (Kulim owns about 50% of NBPO). NBPO is one of the world's largest producers of sustainable palm oil.