Kulim gets shareholder nod for RM700m land buy

Johor Baru: Kulim (Malaysia) Bhd shareholders yesterday gave the go-ahead for the company to buy six parcels of oil palm plantation land in Johor for RM700 million cash from Johor Corporation (JCorp).

While the shareholders’ approval indicate their optimism of the purchase and of Kulim’s outlook, for JCorp, the RM700 million it will get from the sale means it will have cash to meet its obligations on bonds maturing next year.

The sale is a major component of the JCorp group’s rationalisation exercise.

The RM700 million cash accruing from the estates’ disposal is the first out of the expected RM1 billion cash to be generated before July 31 2012. The balance of RM300 million will come from internally generated funds.

JCorp president and chief executive officer Kamaruzzaman Abu Kassim said, in a statement yesterday, that the group is finalising a plan for repayment of its remaining debts. As part of the exercise, CIMB Bank which is also its adviser, and Maybank will act as joint lead managers for the new bonds issue in 2012.

Kulim shareholders approved the purchase of six parcels of oil palm plantation land totalling 13,687ha and two palm oil mills at an extraordinary general meeting held here yesterday.

Meanwhile, Massive Equity Sdn Bhd (MESB), a special purpose vehicle jointly owned by JCorp and CVC Capital Partners (CVC), welcome the acceptance KFC Holdings Bhd and QSR Brands Bhd of its offer to buy the two fast food companies.

The privatisation of QSR will not result in JCorp itself incurring additional debt. This is because funding for the transaction will be done via MESB on the strength of the future cash flow of the two businesses. Once the sale to MESB completes, the proceeds will be returned to all shareholders of QSR and KFC.

The move will also give Kulim, which is currently the controlling shareholder of QSR, an opportunity to sell off its stake in the food retail businesses and focus on its core plantation business.

Kamaruzzaman said the acquisition will enable JCorp to gain direct controlling interest in both companies it considers as having good fundamentals and long-term value.

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