KUALA LUMPUR (Nov 14): Urusharta Jamaah Sdn Bhd (UJSB), a wholly-owned subsidiary of the Ministry of Finance, has completed the transfer of non-performing assets held by Lembaga Tabung Haji (LTH) as a part of LTH's rescue and restructuring plan.
In a statement today, UJSB said the transaction, which was completed on Dec 28, 2018, involved a transfer of assets with a market value of RM9.63 billion from LTH to UJSB in exchange for RM19.9 billion, consisting of two tranches of Sukuk totalling RM19.6 billion and RM300 million respectively in cash payable to LTH.
"The difference of RM10.3 billion between the consideration of RM19.9 billion and RM9.63 billion market value of assets is to be borne by the government to ensure that the financial health of LTH is restored," UJSB said.
It further stated that in the event the value of the assets depreciates further, the losses for the government will be higher than RM10.3 billion.
The assets transferred to UJSB consist of a mixture of listed equity holdings, properties and one unlisted plantation asset.
The property assets transferred to UJSB include a parcel of land measuring 1.568 acres at Tun Razak Exchange (TRX).
"The land was purchased by LTH at RM188.5 million or RM2,760 per square feet, significantly higher than that paid for by 1Malaysia Development Bhd (1MDB) at only RM75 per square feet (or RM5.1 million for 1.568 acres)," it said.
The land was then purchased by UJSB from LTH at RM400 million (RM5,856 per square feet), which does not reflect the actual market value of the TRX land.
The purchase consideration was done at a significant premium (112.2%) to what LTH paid in April 2015 (RM188.5 million or RM2,760 per square feet).
"In a recent valuation exercise conducted in March 2019, the market value of the said TRX land stood at only RM205 million.
"The huge difference between the market value and the purchase value of the land (95% premium over market value), together with all the other assets acquired by UJSB, was needed to ensure the successful rescue and restructuring plan of LTH," UJSB said.
UJSB will bear significant losses as a result of impairment charges estimated at more than RM10 billion for the assets acquired from LTH.
It noted that the TRX land transaction itself will result in an impairment charge of RM195 million.
"With the transfer of assets now completed, UJSB will continue with its mandate and purpose, which are to carry out the rehabilitation and restructuring of assets under its care; to maximise asset recovery value; and to redeem all monetary instruments issued by UJSB and subscribed by LTH in a timely manner," it said.