JCorp to raise RM3bil

Company to issue Islamic bonds guaranteed by the Federal Government

KUALA LUMPUR: State investment corporation Johor Corp (JCorp) has said it would raise RM3bil from the debt market via a government-guaranteed “sukuk wakalah” Islamic capital market instrument, confirming an earlier report by StarBiz.

The proceeds of the sukuk issuance would be mainly used to settle JCorp's debts of RM3.2bil due for repayment in July.

When asked why the Federal Government guaranteed debt papers that would be used mainly to repay JCorp's older debts, its president and chief executive Kamaruzzaman Abu Kassim said the application to the Federal Government had been approved and that “we have received it from the Finance Ministry with certain conditions of which JCorp has been compliant with some of the conditions”.


Kamaruzzaman: ‘When we go to the market with a government-guaranteed sukuk, any investor can put it as part of their investment.’
“The (potential) investors to this debt issuance would be the public at large. When we go to the market with a government-guaranteed sukuk, any investor, be it the Employees Provident Fund (EPF), private fund managers (and) even banks can put it as part of their investment,” JCorp vice president of finance and legal division Mohamed Izaham Abdul Rani said.

“It will be a public offering through a book-building process, not through a private placment,” he added.

Kamaruzzaman also revealed that JCorp's debt to reserve ratio stood at 3.25 times.

“We don't use debt to equity ratio because we are not a company. The next best alternative ratio is the debt to reserve ratio which is at 3.25 times (for long term liabilities as debt). Reserves are the retained profits of JCorp which stand at slightly above RM1bil,” Kamaruzzaman said.

“Based on book value, JCorp's total assets for current assets is about RM5.7bil at the corporation level. At the corporation level we have RM3.2bil in debts (as of now) and our total short and long term liabilities stands at over RM4bil,” he said.

The state investment corporation of Johor had yesterday arranged a press conference to detail its financial health. However, key financial information statements such as its balance sheets and cash flow statements were not handed out to the press.

When asked about this, Kamaruzzaman said: “Once our accounts are audited, we'll prepare the annual report (which) will be submitted to the state assembly of Johor - and we load our accounts on our website (so that) it becomes accessible to everybody”.

Meanwhile, JCorp said it had recorded an increase of 55% in its profit after tax of RM1.1bil in its financial year ended Dec 31, 2011 compared with the previous year's RM682mil, on the back of revenues rising by a much smaller degree of 4% to RM7.8bil from RM7.5bil in the previous financial year.

In the slides for its presentation, JCorp said it had recorded revenue growth in all the core businesses that it was involved in and saw the largest year-on-year growth in the plantations division (46%), followed by the property division (24%) and the intrapreneur ventures division (22%).

Year-on-year profits after tax growth were driven by its property sector (327%), intrapreneur ventures (207%) and the plantations division (42%).

On another matter, JCorp said its privatisation of KFC Holdings (M) Bhd and parent QSR Brands Bhd was on track, adding that Yum Brands had currently “no objections” to the proposed privatisation.

“Well, there are many factors and this is an ongoing transaction. But at the moment, they (Yum) has no objections in terms of understanding but we cannot say something is for sure (the privatisation) until we (have) reached that position,” Kamaruzzaman said.

“We (have) briefed them about this (privatisation) proposal, until we reach to the point where a formal application be made only then the process will be formally made. At the moment it is only discussions and engagements with Yum,” he said, adding that the process had taken slightly longer than had been anticipated.

When asked on how it plans to fund the pending privatisation, Kamaruzzaman said that it will look at raising money through a combination of equity and debt of which the debt portion does not include the upcoming RM3.2bil sukuk issuance.