Gov't to bear RM10.3b premium in Tabung Haji's restructuring plan

The government will bear a RM10.3 billion premium to ensure the financial health of Lembaga Tabung Haji is restored as part of the rescue and restructuring plan of the pilgrimage fund, Urusharta Jamaah Sdn Bhd announced today.

Urusharta, a wholly-owned unit of the Finance Ministry, has completed the transfer of non-performing assets valued at RM9.63 billion held by Tabung Haji in December last year, resulting from the fallout from the financial mismanagement and wrongdoings by the previous management.

The transfer was done from LTH to UJSB in exchange for RM19.90 billion, consisting of two tranches of Sukuk totalling RM19.60 billion and RM300 million in cash payable to LTH.

“The difference of RM10.3 billion between the consideration of RM19.90 billion and RM9.63 billion market value of assets is to be borne by the government to ensure that the financial health of Tabung Haji is restored,” Urusharta said in a statement here, today.

UJSB pointed out that in the event the value of the assets depreciates further, the losses shouldered by the government will be higher than RM10.3 billion.

Explaining on the assets transferred, Urusharta said it consists of a mixture of listed equity holdings, properties and one unlisted plantation asset.

The property assets transferred to Urusharta include 0.63 hectares of land at Tun Razak Exchange (TRX).

The land was purchased by Tabung Haji at RM188.5 million or RM2,760 per square foot, significantly higher than that paid for by 1Malaysia Development Bhd (1MDB) at only RM75 psf (or RM5.1 million for 0.63ha).

Urusharta then purchased the TRX land from Tabung Haji at RM400 million or RM5,856 psf, which does not reflect the actual market value of the said land. The purchase consideration was done at a significant premium (112.2 percent) to what Tabung Haji paid in April 2015 (RM188.5 million or RM2,760 psf), it explained.

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 percent premium over market value), together with all the other assets acquired by Urusharta, was needed to ensure the successful rescue and restructuring plan of Tabung Haji.

Overall, Urusharta will bear significant losses as a result of impairment charges estimated at more than RM10 billion for the assets acquired from Tabung Haji.

The TRX land transaction itself will result in an impairment charge of RM195 million.

“With the transfer of assets now completed, Urusharta 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 Urusharta and subscribed by Tabung Haji in a timely manner.”

- Bernama