KUALA LUMPUR (Dec 11): Lembaga Tabung Haji (TH) said the special purpose vehicle (SPV) under the Ministry of Finance (MoF) will be acquiring RM19.9 billion worth of the pilgrim fund's underperforming properties and equities, in exchange for RM10 billion in sukuk and RM9.9 billion in Islamic redeemable convertible preference shares (RCPS-i).

At a media briefing today, TH group managing director and chief executive officer Datuk Seri Zukri Samat said properties with yields of less than 2% and equities that have seen impairment of more than 20% will be acquired by the SPV at book value.

Of the assets to be transferred to the SPV, 80% of the total value comprises equities while properties account for the balance 20%.

Zukri highlighted that no cash transactions or government guarantees are involved in the exercise, as the SPV will issue a seven-year non-tradable sukuk, which will be fully subscribed by TH, along with the RCPS-i, with no maturity or dividend.

"We hope to complete the transfer of assets by Dec 31, 2018. As the issuance of the instruments will take some time, TH will record them as receivables in its financial statements.

"Hopefully, the rehabilitation of the assets will be completed by the seventh year," he said.

While he did not go into detail, Zukri said the assets to be disposed of include the land it bought from 1Malaysia Development Bhd (1MDB) as well as the fund's oil and gas and hotel assets. Tabung Haji bought a 0.6ha plot at the Tun Razak Exchange from 1MDB for RM188.5 million in 2015 to build a residential tower there, a deal that had sparked public outcry at the time as it was seen as a bail-out of the cash-strapped state investment fund.

TH is currently undergoing a business review, where it is looking at whether to completely dispose of these assets or pare down its stake.

On completion of the exercise, TH is expected to have RM77 billion in assets, including the sukuk and RCPS-i issuance, to match RM77 billion in liabilities for the financial year ending Dec 31, 2018, enabling it to continue paying dividends to depositors.