Saturday December 18, 2010
JCorp seeks to remove Muhammad Ali
By RISEN JAYASEELAN
risen@thestar.com.my
PETALING JAYA: Johor Corp (JCorp) is seeking to remove Tan Sri Muhammad Ali Hashim, its previous head for 18 years, from the boards of three listed companies it has direct stakes in.
The move seems to confirm speculation that Muhammad Ali, who had suddenly resigned as JCorp's CEO in July, is no longer in the good books of the powers that be in the state of Johor.
JCorp has called for EGMs at Kulim (M) Bhd, KPJ Healthcare Bhd and Damansara Realty Bhd (DRealty) for this purpose.
The removal of Muhammad Ali will be via ordinary resolutions at each of these companies, which means that a simple majority of shareholder votes would achieve the desired result.
While JCorp controls more than 50% of the equity of Kulim and DRealty, it owns only 237.8 million shares in KPJ Healthcare, according to the latest shareholding changes filed with Bursa Malaysia. And according to Bloomberg data, this number of shares amounts to only a 42.6% stake in KPJ.
Hence it appears that for Muhammad Ali to be ousted from KPJ's board, it is going to have to acquire more shares in KPJ or seek the support of other shareholders.
JCorp has been in the news recently after three bids had been presented to Kulim for its controlling stake in QSR Brands Bhd, which in turn is the parent company of KFC Holdings (M) Bhd.
After some delay, JCorp, via Kulim, finally said it was not selling QSR or its subsidiaries, noting that these were key assets in the group and that more value could be extracted from them.
That raised the question: if JCorp was not selling, how come the bids came in from such established names as private equity giants The Carlyle Group and CVC Capital?
It had been reported that insiders said Muhammad Ali could be responsible for putting QSR up for sale. Muhammad Ali is chairman of Kulim, QSR and KFC as well as of KPJ Healthcare and DRealty.
It has also been reported that Muhammad Ali's sudden departure from JCorp had to do with the mountain of debt at JCorp, which was built up via ambitious acquisitions of companies during his tenure as CEO, something that Muhammad Ali has denied in the past, noting that the group has sufficient assets that can be sold to repay off the debt.
Muhammad Ali's tenure at JCorp had attracted both praise and criticism. He had made JCorp one of the most dynamic state investment arms but detractors say he ruled the group like his own fiefdom and expanded the group too fast, accumulating too much debt in the process.
A strong advocate of what he calls business jihad, Muhammad Ali has said he believes business is a good way to help people as it can create wealth and jobs and eliminate poverty.
JCorp recently hired Kamaruzzaman Abu Kassim, its head of finance, as its new CEO.
Some insiders reckon that the action to remove Muhammad Ali signals a resolve by Kamaruzzaman to usher in the new leadership at the group in a post Muhammad Ali era.
It's actually not out of the ordinary. Muhammad Ali had stepped down as JCorp CEO some months ago although he has not relinquished his chairmanship and directorships at the JCorp-controlled companies. This is a matter of process more than anything else, which would likely lead to JCorp putting in a replacement for him as soon as the removal is completed, said one insider.
Kamaruzzaman recently told the media that JCorp would not be selling any of its assets to settle its loan obligations. Instead, it would seek to refinance the RM3.6bil loan obligation that will become due in the middle of 2012.
All three EGMs for Muhammad Ali's removal will be held next month, specifically on Jan 17 for Kulim, Jan 21 for DRealty and Jan 26 for KPJ Healthcare.
http://biz.thestar.com.my/news/story.asp?file=/2010/12/18/business/7647835&sec=business
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