JCorp selling land to repay part of debt

JOHOR BARU: Johor Corp will sell a parcel of land it owns in Johor as part payment for the RM3.6bil debt that is due in July 2012, says president and chief executive officer Kamaruzzaman Abu Kassim.

He also said the land had a market value of more than RM2bil.

The land was located within parts of Johor Baru that were earmarked for development under the RM1.8bil Johor Baru city centre transformation plan, he told Starbiz after the recent EGM of Kulim (M) Bhd - the main listed company under the JCorp stable.

It was reported that Johor will unveil the master plan for the Johor Baru city centre transformation project in the second quarter of this year.

JCorp also owns 3,237.48ha land in Sungai Belungkor, Kota Tinggi. It plans to sell 404.68ha, which is close to the Pengerang oil and gas hub, to the state government.

Petronas has been tasked by the Government to develop Penggerang and Teluk Ramunia into a new oil and gas hub in the region.

“We are hoping to get good prices for our land in the Johor Baru city area and in Sungai Belungkor,’’ he said.

Sources said JCorp’s land in Johor Baru was located near the Bukit Chagar and Lumba Kuda low cost flats as well as the Persada Johor International Convention Centre.

JCorp is also the land owner of the 1,698.87ha Tanjung Langsat industrial area in Pasir Gudang.

JCorp’s unit Tanjung Langsat Port Sdn Bhd manages Johor’s third port the Tanjung Langsat Port which handles bulk cargo such as liquefied petroleum gas and hazardous chemicals.

Kamaruzzaman’s statement about the sale of land indicated a change in strategy by JCorp. Late last year, Kamaruzzaman had said that JCorp would not be selling any of its assets to repay bondholders’ RM3.6bil when the papers are due on July 31, 2012. He had then said the plan was to refinance the debt.

But sources familiar with the situation said Kamaruzzaman was referring to speculation that JCorp would be selling its other key assets, such as QSR Brands Bhd (that owns KFC Holdings (M) Bhd and London-listed New Britain Palm Oil Ltd.

“The proposed sale of JCorp’s land does fit into the strategy of refinancing its debt. In situations where the debt is huge, it only makes sense that the borrower shows some commitment by making some payments as part of the refinancing plan. The sale could help JCorp pay off a portion of the RM3.6bil debt and refinance the balance,” an investment banker said.

Kamaruzzaman had explained that the RM3.6bil debt was due to some JCorp investment projects since 2000, mainly in landed and industrial properties.

JCorp is one of the country’s largest state economic development authorities and it has 250 companies.

According to JCorp’s 2009 annual report, it had RM705mil cash but RM6.62bil in debt.

It had also paid RM500mil in interests and RM1.7bil in loan repayments. Despite being perceived as asset-rich, it only booked RM5mil in dividend receipts in the financial year 2009.

By The Star