All excess is unacceptable including corporate gluttony! Johor Corp is now paying its overdue tuition fees,so to say.
Yvonne Tan of the online STAR tells a story of an impending fire-sale at JohorCorp.
Vision: To maintain a good corporate image.
Mission: To stay out of an ensuing gargantuan debt.
Yvonne reports:
"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 next year.
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, its newly appointed president and chief executive Kamaruzzaman Abu Kassim said.
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 our assets,” he said.
The group has “saleable assets” of RM2.1bil, Kamaruzzaman said, without elaborating.
JCorp's landbank and properties are largely in Johor and this includes up to RM2.5bil in commercial properties.
At at March last year, it had about 2,000ha to be developed in the Iskandar Malaysia region.
It also has major plantation and palm oil businesses in Papua New Guinea.
Kamaruzzaman said 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. [Any default will make CIMB and Maybank the new owners! So tread very carefully,JohorCorp!]
According to JCorp's 2009 annual report, 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”, it has been reported.
JCorp has been in the news in recent weeks after it rejected two bids for the takeover of its QSR Brands Bhd. One was by a company linked to tycoon Tan Sri Halim Saad and another by the Carlyle Group.
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, Kamaruzzaman revealed.
Kamaruzzaman said yesterday there was a possibility some of these might be listed in the future. “But the proceeds will not be to repay our current debt due for maturity,” he said.
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.
Tightrope walking is no fun. Ask any circus trapeze artiste. So, it is no easy feat, my friend.
Be wise and stop biting more than you can chew. Otherwise get ready for the corporate reflux and its consequences!
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