KUALA LUMPUR (March 15): The non-performing assets held by Lembaga Tabung Haji (LTH) have been transferred to Urusharta Jamaah Sdn Bhd, which is wholly owned by the Ministry of Finance, at a hefty premium of RM9.9 billion for assets worth RM10 billion. 

The premium for the equity stakes in public-listed companies was as high as 36 times (please see list). The 29.8% stake in TH Heavy Engineering Bhd is an example. Urusharta Jamaah paid RM380.3 million for the block of 334.16 million shares, compared with its market value of RM10.02 million. 

The lowest premium is on the block of 65.51 million shares in MISC Bhd, which was transferred at RM486.53 million, or a 10.85% premium over its value of RM438.93 million at end-2018, according to the list attached to the written reply from Prime Minister Departments (PMD) to Dewan Rakyat yesterday.

PMD highlighted in the reply that if prudent accounting standard was practiced by LTH in the past, the pilgrim fund would have been able to continue holding onto these assets. 

Its reply said the assets acquired by Urusharta can be categorised into three types: properties, a non-listed company, and public listed securities.

Urusharta is a special purpose vehicle set up by the government to revive LTH’s financial health caused by the large deficit between its assets and liabilities. It is acquiring the pilgrims fund’s underperforming properties and equities in exchange for RM10 billion in non-tradable sukuk, and RM9.9 billion in Islamic redeemable convertible preference shares as part of its restructuring plan.

By exchanging its RM10 billion non-performing assets for RM19.9 billion worth of sukuk and Islamic redeemable convertible preference shares, it will help remove the pilgrim fund’s massive impairments on its assets.  

The restructuring plan will ensure the fund will be able to make hibah distributions according to the Tabung Haji Act 1995, said PMD.

PMD said overall, the assets transferred from LTH to the SPV comprises 29 properties, one company that is not public listed, and equity stake or derivatives in 106 public listed companies.

“If a prudent impairment rate has been practiced previously by the old management, not at 90% level, and the provision of impairment is made on the profit and loss statements in the past years, of course, LTH will be capable of continuing to hold all of these shares,” it added.

PMD pointed out that over the past few years, all of these equity losses were parked under ‘other reserves’ in LTH’s financial statements in order to continue showing high profit, and to ensure there were hibah payments every year. Consequently, this has resulted in the widening gap between its assets and liabilities.

PMD said based on LTH’s audited financial statements for 2017, ‘other reserves’ shows a negative value of RM4.6 billion.

Therefore, PMD said the government’s intention is to restore LTH’s financial position by taking over these losses to close the widening deficit.

PMD said Urusharta Jamaah’s role now is to implement rehabilitation for these assets through warehousing strategy and restructuring, while continuing the operations of the transferred assets to maximise their recovery value.

On top of that, PMD said Urusharta Jamaah will redeem all the financial instruments it issued and subscribed by LTH.

The issue of LTH's asset transfers was raised by Ahmad Amzad Mohamed @ Hashim (PAS-Kuala Terengganu) yesterday, who had asked the Prime Minister to state the value of each asset (equity and property) that has been transferred to Syarikat Urusharta Jamaah Sdn Bhd by LTH.

Properties

Non-listed Company

Domestic equity securities