JOHOR Corp Bhd (JCorp), the state-controlled investment arm of Johor, is in the midst of a large-scale restructuring exercise, which entails a full-scale review of its existing business ventures, sources familiar with the matter tell The Edge.

While details are scarce, it is understood that Maybank Investment Bank Bhd and CIMB Investment Bank Bhd have been roped in to assist with the restructuring of JCorp, which had RM23.28 billion in assets as at end-December 2019.

In an email response to questions from The Edge on the planned restructuring, a JCorp spokesperson says, “As a major investment holding institution with core businesses involved in the Malaysian economy, we are continuously reviewing and assessing our investments. This is with a view to strengthen our investment portfolio.

“Given that JCorp invests in listed entities on Bursa Malaysia and as one of its shareholders, we are committed to exacting disclosure requirements. Should there be any pertinent announcements to be made, we will do so in accordance with these requirements.”

Meanwhile, a source says JCorp is putting in place tighter controls for better governance, and streamlining its portfolio of businesses under the restructuring, which will see the group focusing on only four core sectors — agribusiness, wellness and healthcare, food and restaurants, and real estate and infrastructure.

“To put it simply, the mandate is … membina dan membela (build and de fend),” he says, declining to elaborate.

Another source familiar with JCorp says, “It is currently undertaking its transformational plan and business sustainability, which includes corporate and financial restructuring to ensure success during this challenging period.”

At present, JCorp’s key assets are plantation company Kulim (M) Bhd, which has a of land bank of more than 55,000ha in Malaysia and Indonesia; KPJ Healthcare Bhd, which operates 28 hospitals in Malaysia, two in Indonesia, one in Bangladesh, one in Bangkok and four retirement and aged care facilities in Kuala Lumpur, Sibu, Pahang and Brisbane, Australia; QSR Brands (M) Holdings Bhd, which has more than 1,300 KFC and Pizza Hut restaurants in Malaysia, Singapore, Brunei and Cambodia; and property development outfit Johor Land Bhd, which has a strong presence in the state.

KPJ, which is a listed entity, unlocked the value of its hospital assets in 2006, floating the shares of its assets in a real estate investment trust, Al-`Aqar Healthcare REIT. KPJ has 36.56% in the REIT, which has 23 properties — 17 hospitals, three wellness centres, two colleges and one aged care and retirement village. At its close of RM1.25 last Thursday, Al-`Aqar Healthcare’s market value was RM919.98 million.

Quoting sources, The Edge reported on July 17 that JCorp, partnering global private equity fund TPG, had planned to privatise KPJ, but the plan was shelved because of the Covid-19 pandemic.

Meanwhile, the flotation of QSR Brands, touted to be in the region of RM6 billion, was deferred in 2019 and could be back on the cards when things pick up after the pandemic subsides.

It is noteworthy that JCorp has a 57.56% interest in Al-Salam REIT, which has 54 properties across Malaysia, including three retail malls, an office building, 43 restaurants made up largely of KFC and Pizza Hut outlets, and seven food and beverage assets.

JCorp also has stakes in smaller companies, including a 50.05% stake in oil and gas service provider EA Technique Bhd and 13.81% in Damansara Holdings Bhd (formerly Damansara Realty Bhd).

In February 2014, JCorp sold 51%, or 157.78 million shares, in Damansara Holdings to Seaview Holdings Sdn Bhd, the vehicle of well-connected businessman Datuk Daing A Malek Daing A Rahman, for 50 sen a share, or RM78.89 million, although the market price then was RM1.71. Although a mandatory general offer was triggered, the low offer price of 50 sen did not entice other shareholders.

For its 15 months (the company changed its financial year to June) ended March 2021, Damansara Holdings suffered a net loss of RM17.64 million from RM232.31 million in revenue. The company has not posted profits in the last five quarters and closed last Friday at 37.5 sen, for a market capitalisation of RM117.8 million.

Meanwhile, EA Technique suffered a net loss of RM25.88 million from RM30.87 million in revenue for its first quarter ended March 2021. As at end-March, the company had cash, bank balances and deposits of RM11.12 million, and short-term borrowings of RM125.95 million and long-term debt commitments of RM94.45 million. In addition, it had accumulated losses of RM47.97 million. The company ended trading last Thursday at 8.5 sen, giving it a market value of RM45 million.

It is not known what JCorp plans to do with these stakes.

It is also noteworthy that the company had, in 2012, issued RM3 billion worth of sukuk wakalah for a corporate restructuring, including the refinancing of RM3.2 billion worth of debt papers issued in 2002. RM1.8 billion of the Islamic debt papers, which have a 10-year tenure, mature in June next year. The remainder, a RM400 million tranche of five-year notes, matured in June 2017, and RM800 million in seven-year notes matured in June 2019.

For its financial year ended December 2019, JCorp chalked up after-tax profits of RM295 million from RM6 billion in revenue, which is an improvement from RM216 million in after-tax profits from RM5.56 billion in revenue in FY2018.

As at end-December 2019, JCorp had cash and bank balances of RM1.14 billion and total assets of RM23.28 billion. On the other side of the balance sheet, it had current liabilities of RM2.12 billion and long-term borrowings amounting to RM1.23 billion. Total liabilities were pegged at RM14.23 billion.