KUALA LUMPUR: Lembaga Tabung Haji (TH) will transfer its underperforming assets worth RM19.9 billion to a special purpose vehicle (SPV) to be owned by the government via the Ministry of Finance, as part of its turnaround plan to have a clean balance sheet with assets being equal to liabilities.
The move comes after the pilgrim fund was discovered to have fallen into a deficit of RM4.1 billion as a result of higher liabilities of RM74.4 billion against RM70.3 billion in assets.
The underperforming assets will comprise a mix of properties with a yield less than 2% and equities with an impairment of more than 20%.
According to TH group managing director/CEO Datuk Seri Zukri Samat (pix), 75%-80% of the assets will be in the form of equities while 20% will be properties, including the land that was acquired from 1Malaysia Development Bhd (1MDB).
In exchange for the assets, the SPV would issue RM10 billion of seven-year sukuk and RM9.9 billion of Islamic re-deemable convertible preference shares (RCPS-i).
Zukri said the asset transfer, which is to be completed by Dec 31, 2018, does not involve cash transactions or government guarantees on the sukuk.
The sukuk will be non-traceable and fully subscribed by TH, as well as redeemable at any time without penalty.
“It is going to be a seven-year sukuk with a yield of 5%. Hopefully seven years will be sufficient for the SPV to rehabilitate the assets,“ he said at a media briefing today.
Zukri also clarified that the 2017 financial statements was audited by the National Audit Department while Pricewaterhouse Coopers (PWC) was roped in to conduct an independent review on the financial position of TH.
On the police reports being lodged after the PWC report and not after the findings of the National Audit Department came to light, he noted that the group wanted to be certain on its findings before making the move.
“We wanted to make sure that we are certain. That’s why we engaged a professional to verify the numbers as we don’t want to jump to conclusion,” he said, adding that the issue was properly investigated.
Zukri highlighted that TH is also reviewing its investment portfolio and may exit sectors that are not doing well or pare down its stake.
As for its Hajj operations, he said cost-cutting measures have been initiated to reduce overheads and the group is looking for areas where it can cut costs further.
Commenting on the statement made by the fund’s former chairman Datuk Seri Abdul Azeez Abdul Rahim, Zukri said a statement will be made by Ernst & Young (E&Y) soon.
Abdul Azeez slammed the revelation made by Minister in the Prime Minister’s Office Datuk Seri Mujahid Yusof Rawa as inaccurate as it did not take into account a report by E&Y, which had valued TH’s realisable asset value as exceeding its liabilities.
On the allegations that RM22 million from its foundation Yayasan Tabung Haji for the underprivileged was disbursed for politically-linked activities, Zukri said the matter is under probe by the police.
TH will be supervised by Bank Negara Malaysia from Jan 1, 2019 to restore the rakyat and depositors’ trust in the pilgrimage fund.
