KUALA LUMPUR, Dec 11 — Lembaga Tabung Haji (LTH) will be brought back to financial health by offloading around RM19.9 billion in underperforming assets to a special purpose vehicle controlled by the Finance Ministry, said Datuk Seri Zukri Samat.
The LTH chief executive and managing director said the assets were primarily real estate and equity holdings that will be identified using two criteria.
“For property, it would be those with a yield of less than two per cent (annually) and for equities, the value impaired would have exceeded 20 per cent,” he said referring to paper losses for the latter.
“This is to ensure that LTH would have a clean balance sheet with assets equal to liabilities,” he said during a press conference on the pilgrim fund’s rehabilitation and restructuring plan.
Eighty per cent of the total value assets to be moved to the SPV were equities while real estate made up the remainder.
Among the under-performing assets identified were Felda Global Ventures (FGV), a land parcel in the Tun Razak Exchange purchased from 1Malaysia Development Bhd (1MDB), and TH Heavy Engineering Bhd.
Zukri explained that under the exercise, the SPV will issue RM10 billion in seven-year Islamic bonds and another RM9.9 billion of Islamic Redeemable Convertible Preference Shares (RCPS-i).
The Islamic bonds are deeply discounted and promising 5 per cent in annual returns, while the RCPS-i has no maturity but will also yield no dividends.
“There is no cash transactions and no government guarantee.
“We hope to complete the transfer of assets by Dec 31 and as the issuance of the instruments will take some time, TH will record them as receivables in its financial statements,” he said.
He gave his assurance that dividend payouts for depositors would be forthcoming albeit at a lower quantum than before, but said he was certain of the precise rate as the accounts for the current financial year were not yet closed.
He also dismissed talks of a run on Tabung Haji savings and predicted the fund’s return to financial health next year, adding that he was informed of 170 new accounts opened today.
Aside from the SPV, Zukri said other key components of the turnaround include instituting a risk management framework to keep future investment policies in line with the new business model.
He also said LTH was happy to come under the supervision of Bank Negara Malaysia from Jan 1 as this would accelerate the implementation of the planned remedial steps.
Once the exercise is concluded, he said LTH should have RM77 billion in assets, including the Islamic bonds and RCPS-i issuance, to match its liabilities for the financial year ending Dec 31, which is needed to pay dividends to depositors.
Minister in the Prime Minister Department’s in charge of Islamic affairs Datuk Seri Mujahid Yusof Rawa revealed yesterday that LTH has been paying out dividends illegally since 2014 while its financial position remained in the red.
He said PricewaterhouseCoopers conducted an audit on TH’s 2017 financial account and discovered the Muslim pilgrims savings fund’s true financial position included assets totalling RM70.3 billion and liabilities of RM74.4 billion, a deficit of RM4.1 billion.
The Tabung Haji Act 1995 prohibits the payment of dividends, or hibah as they are called in Islamic financial terms, if LTH is in deficit and has no distributable profits.