KFC Holding (Malaysia) Bhd (KFCH) has decided to issue RM200 million in asset-backed securities (ABS) via a special purpose vehicle (SPV) by year-end, with the purceeds to be used to redeem its RM300 million Islamic bonds.

Its group managing director Datuk Johari Abdul Ghani said the ABS would be backed by its retail properties, a food processing plant, a warehouse and a chili sauce factory that have a combined value of RM200 million.

"We want to have cash on standby," he told reporter at KFCH'S AGM in Kuala Lumpur yesterday. The Islamic bonds would be redeemed is several tranches starting this year until 2008. Under the ABS, Johari said the group would dispose of the properties to an SPV and lease them back. He said the ABS would likely have a 10-year tenure.

He also said the RM90 million from the disposal of its 22-story Wisma KFC to the Employees Provident Fund would be used to redeem the Islamic bonds. KFCH is leasing back the building for 10 years. With the finance to redeem islamic bonds in place, he said KFCH would have the internal funds to grow its business and be able to give more dividends to its shareholders. Affin Merchant Bank Bhd was commissioned to structure the ABS.

On another matter, Johari said QSR Brands Bhd intended to raise its stake in KFCH to 32.9% from 29% now, to strengthen its control of KFCH. Johari is also QSR Group managing director.

QSR, which took over Ayamas Corporation Bhd's listing status, had been increasing its stake in KFCH TO 29%, from 28% recently.

Johari said this was to meet the requirement of Yum! Brands Inc, that QSR hold a minimum 29% stake in KFCH. QSR would seek shareholder approval soon to allow it to acquire more shares in KFCH to reach the 32.9% level, he said. He said the approval was necessary, as the additional equity interest in KFCH that QSR intended to acquire was more than 5% of QSR's net tangible assets.