Rights to area Pizza Huts to be sold in KFC Malaysia MBO

March 16, 2003

KUALA LUMPUR -- KFC Malaysia Bhd's management, led by executive director Johari Abdul Ghani, is undertaking a buyout of the company via a complex restructuring exercise that will see the team owning 13 percent of a new company that will become the single largest shareholder of KFC Malaysia.

According to AFX News, Johari said the restructuring involves Ayamas Corp. trading its shares and transferring its listing status to a new company.

The new company will buy a 29.38 percent stake in KFC for 291 million ringgits or 5.10 ringgits (U.S. $76.5 million and $1.34 respectively) a share from CI Holdings Bhd, plus the entire equity of Pizza Hut from KFC for 115 million ringgits (U.S. $30.2 million).

Concurrently, Ayamas Corp will sell its existing poultry business to KFC for 260 million ringgits (U.S. $68.3 million) while KFC will dispose of its 49 percent interest in beverage operator Permanis Sdn Bhd to CI Holdings for 35.28 million ringgits (U.S. $9.3 million).

As part of the deal, KFC, which owns 94 million shares (48 percent of the new company), will make a restricted offer for sale of the new company's shares to KFC minority shareholders on the basis of 1,000 shares and 400 free warrants for every 2,000 KFC shares held at 1 ringgit par (U.S. 26 cents)

KFC will offer the remaining portion of the new company's shares to the management team at 1.15 ringgits per share (U.S. 30 cents).

Johari said that to complete the deal, the new company must raise 146 million ringgits (U.S. $38.4 million) for the two acquisitions.

KFC will end up with net cash of around 12 million ringgits (U.S. $3.2 million) after accounting for expenses relating to the restructuring.

He said Ayamas will provide 50 million ringgits (U.S. $13.2 million) of its 70 million ringgits (U.S. $18.4 million) in existing cash as dividends to the new company to partially finance the acquisition of KFC and Pizza Hut.

The remaining 96 million ringgit (U.S. $25.2 million) acquisition cost will be raised through the Islamic market and/or bank loans.

Johari said on completion of the exercise the three organizations will have a clear focus with the new company becoming a leading quick-service restaurant operator, while KFC will be a fully integrated poultry processing and retailing group and CI Holdings, a beverage operator.

Topics: Financial Management

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