© Nikkei Markets
KUALA LUMPUR (Dec 11) — Malaysia’s state-run Muslim pilgrimage fund board, Lembaga Tabung Haji, will transfer under-performing assets worth 19.90 billion ringgit ($4.76 billion) to a state-run special purpose vehicle as a part of its broader restructuring plan, its managing director and chief executive said Tuesday.
“We’re transferring the assets to an SPV, owned by the Ministry of Finance before Dec. 31,” Zukri Samat said at a news conference.
The underperforming assets include equity investments that have lost more than 20% in value and properties with a yield of less than 2%.
In exchange, the Ministry of Finance-owned SPV will issue Islamic bonds, or sukuks worth 10 billion ringgit and Islamic redeemable convertible preference share worth 9.90 billion ringgit to Tabung Haji.
“The sukuk will be subscribed by Tabung Haji. We cannot go to the market to sell the sukuk. We’re proposing a seven-year sukuk so that the SPV has time to (turn around) the (underperforming) assets,” said Zukri.
The Islamic redeemable convertible shares won’t have maturity timeframe and yield no dividend.
Tabung Haji would also be placed under Bank Negara’s supervision from Jan.1, 2019, Zukri added.
With this recovery plan, the fund hopes it would be able to improve its balance sheet for the financial year 2018.
It has been in the limelight for allegedly issuing dividends to its depositors since 2014 even as its liabilities exceeded the value of its assets as of the financial year 2017, the Islamic affairs minister informed the parliament Monday.
– By Gan Pei Ling
– Edited by Sayantika Bhowal