LEMBAGA Tabung Haji’s (TH) turnaround plan, which involves the government setting up a special purpose vehicle (SPV) to take over the pilgrim fund’s underperforming assets, is not a bailout as claimed by some, its new chief says.
“There’s no bailout because there is no cash outlay by the government, neither is there any government guarantee on the sukuk. There is no immediate impact on the government at all,” Datuk Seri Zukri Samat tells The Edge in an interview.
Under the plan, which was unveiled last week, the SPV — to be owned by the Ministry of Finance — will acquire RM19.9 billion worth of TH’s underperforming properties and equities at book value.
In exchange, the SPV will issue RM10 billion in seven-year sukuk, which will be fully subscribed by TH, along with RM9.9 billion in Islamic redeemable convertible preference shares (RCPS-i), with no maturity or dividend.
“The SPV will then work on selling the assets that were transferred to them. They don’t sell the assets immediately, of course … they will rehabilitate and maximise recovery of those assets. Whatever [cash] they get out of it will be used to settle the sukuk and the RCPS-i,” Zukri explains.
The sukuk is redeemable at any time without penalty, he adds.
Of the assets to be transferred to the SPV, 80% of the total value comprises equities with properties accounting for the balance 20%. TH intends to complete the asset transfer by the end of this year, after which it will have a clean balance sheet with assets equal to liabilities.
Will dividends be declared for FY2018?
“We cannot promise, but we are trying our best to pay some dividend,” Zukri says. “It is not the year end yet, it is only mid-December, so we have to close our accounts first.”
In order to pay dividends to depositors, TH, which is regulated by the Tabung Haji Act 1995, has to fulfil two conditions — it must have more assets than liabilities and it must be profitable. From Jan 1, 2019, TH will be placed under the supervision of Bank Negara Malaysia. Zukri hopes the rehabilitation of the assets will be completed by the seventh year.
According to Zukri, TH will keep its 51.5% stake in BIMB Holdings Bhd. BIMB fully owns Bank Islam Malaysia Bhd, one of the country’s more profitable banks, and has a 60% stake in insurer Syarikat Takaful Malaysia Keluarga Bhd.
Source The Edge Markets