TH announces turnaround plan, confident of return to profitability

TH group managing director Zukri Samat says all investments will be subject to strict risk assessment.

KUALA LUMPUR: Pilgrims fund Tabung Haji’s (TH) turnaround plans for the coming year include transferring RM19.9 billion in underperforming assets to a special purpose vehicle (SPV) under the finance ministry.

At a press conference today, TH group managing director and chief executive Zukri Samat said the assets would comprise properties of yields under 2% per annum, such as the land it purchased from 1MDB in 2015 and equities with an impairment of 20%.

This means shares which have dropped 20% since TH acquired them, including its shares in Felda Global Ventures (FGV).

“The value of these assets is based on book value,” he said, adding 80% of the RM19.9 billion comprised equities and the remainder were properties.

The assets, he said, would be transferred to the SPV by Dec 31.

“TH will not be paid in cash for these assets but issued RM10 billion in sukuk bonds and RM9.9 billion in Islamic redeemable convertible preferences shares (RCPS-i).”

The sukuk bonds have a seven-year maturity with zero-coupon to be issued at a discount yielding 5% per annum, while the RCPS-i is with no maturity and no dividends.

“There is no cash transaction and no government guarantee on the sukuk issued by SPV; the sukuk is also not tradable.”

Zukri said TH would keep the sukuk until the SPV chose to redeem them for cash once it had made a profit from the underperforming assets.

Zukri said other important components of the turnaround included a review of TH’s investment portfolio and strategic asset allocation, the enhancement of risk management for all investments, as well as the reviewing and strengthening of procurement policies.

“All investments will be subject to strict risk assessment,” he said adding, TH had recruited a risk management team to look at all investment proposals.

On whether TH depositors could expect dividends, Zukri said for TH to pay dividends it must meet two criteria, namely, it must have more assets than liabilities and it must be profitable.

To this end, he said the transfer of assets to the SPV should ensure it had more assets than liabilities. He said he was “positive” TH would see some profits, but noted that the year had not ended.

“I’m positive for 2018, TH will be back in business.”

He added TH should not compete with investment bodies such as Permodalan Nasional Berhad and that it should ensure a steady stream of income to meet its mandate.

Zukri also said there was no spike in withdrawals following recent revelations pertaining to TH’s assets, liabilities and management.

“Just today, I am told, 170 came to open up accounts with TH.”

Yesterday, Minister in the Prime Minister’s Department Mujahid Yusof Rawa, who is in charge of Islamic affairs, revealed that Tabung Haji paid dividends to its depositors despite bearing liabilities significantly higher than its assets.

He said this after it was revealed that TH had recorded assets of RM70.3 billion up till December 2017, but had liabilities worth RM74.4 billion.

TH’s new management recently lodged police reports against seven former senior management officers over past financial transactions made by them. - FMT