KFCH saga finally over?


  • Business
  • Saturday, 23 Jul 2005

IS the KFC Holdings saga finally over?  

That is what many people in the know think, given that Kulim (M) Bhd managed to get an order from the High Court to set aside an injunction sought by Eagle Option Sdn Bhd, which is said to be the vehicle of KFC Holdings (M) Bhd (KFCH) chairman Tan Sri Nik Ibrahim Nik Kamil.  

This order paves the way for Kulim to buy the block of shares that it previously couldn't and with that, the company could potentially end up with close to 50% in QSR Brands Bhd, which has a 32% stake in KFCH. 

This interesting turn of events may be to Kulim's benefit but the irony of it all is that while Nik was busy presenting the future roadmap for QSR and KFCH yesterday morning, the High Court judge could have been deliberating on Kulim's application. 

The court order was issued not long after Nik finished his presentation, and left many wondering if the roadmap would still remain relevant if Kulim were to take the driver's seat at QSR and KFCH.  

Nevertheless, Nik presented a very impressive plan and if all goes as planned for KFCH and QSR, both companies would be in a much better financial position. 

But Nik is also a fast mover. Once Kulim obtained the court order, he wasted no time in appealing against the court decision the same afternoon.  

A spokesperson for Nik told StarBiz: “An appeal has been filed immediately with the Court of Appeal. Of course, Tan Sri Nik will assert his rights to the sales and purchase agreements (between Kulim and the two vendors).'' 

Yesterday, Kulim told Bursa Malaysia that the Kuala Lumpur High Court had refused to extend the ex parte injunction, which had now expired.  

Further to that, on the same day, the Court also turned down the application of Chain Valley Management Ltd and Eagle Option for an interim injunction restraining the defendants - Kulim, Indexia Assets Ltd and UOB Kay Hian Pte Ltd - from disposing of a block of shares to Kulim.  

Eagle Option is Nik's vehicle; he has over 19% interest in QSR.  

Kulim came into the picture in June when it announced it was buying a block of KFCH shares from four vendors - Indexia Assets Limited, Naunton International Ltd, Wisdom Innovative Technology Sdn Bhd and Yates Ventures Ltd, and had at the same time, bought shares in the open market.  

Eagle obtained an injunction stopping Indexia and Naunton from selling their shares to Kulim but not the other two. 

Given the current scenario whereby Kulim can buy the entire block and given that it has been collecting QSR shares in the market place, it would eventually end up with close to 50% equity. This is based on QSR's share capital of 238 million shares. 

Although many people would like to see an end to the KFC saga, a lot also depends on Nik's and Kulim's next moves and how they want to increase their stakes to outbid each other.  

But Kulim has said earlier that it would undertake a mandatory general offer for the remaining shares it does not own at RM3.20 a share and sources said the company would stand by its offer. 

Kulim officials could not be reached for comment but sources said they are preparing a submission to KFC franchise holder YUM! International to inform them that Kulim now would end up with a bigger stake in QSR and that it also wants its name on the franchise agreement. Last week, Nik said that the franchise agreements were intact after having met top officials from YUM! in Singapore.  

In the meantime, Datuk Johari Abdul Ghani - who has been suspended as KFCH and QSR group managing director - has filed two suits in the High Court against KFCH and QSR over his removal. 

“I filed the suits yesterday and am confident that justice will be served. I am also seeking legal advice on a possible defamation suit against both QSR and KFCH. I will decide on that next week,'' he said.  

Johari, however, welcomed the High Court decision in favour of Kulim, as he believes KFCH and QSR need an institutional investor.  

“This new development is very positive for Kulim. That is what I have been fighting for all this while, as I believe KFCH and QSR should have institutional investors and with Kulim, there can be more stability, not just with regards to the company but also for the minority shareholders,'' he said. 

Bursa Malaysia had, earlier this month, given QSR and KFCH six months to announce who their major shareholders were. 

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