KUALA LUMPUR (Oct 18): Lembaga Tabung Haji (LTH) is still in discussion with all stakeholders of the Islamic bonds issued by Menara ABS Bhd (MABS) to “find the best solutions involving the redemption of the sukuk”, said Minister in the Prime Minister’s Department (Religious Affairs) Datuk Mohd Na’im Mokhtar.

That said, the pilgrim fund, which subscribed to RM600 million worth of the sukuk issued by MABS, “does not support any asset disposal below market value”, the minister said in a parliamentary reply on Wednesday.

“LTH will ensure the solution will result in optimum returns to depositors,” Mohd Na’im said, in response to questions from Datuk Ahmad Marzuk Shaary (PN-Pengkalan Chepa) for an update on the sukuk matter, and on issues faced by the fund in relation to its property investments in Saudi Arabia.

MABS, a trust-owned special purpose vehicle sponsored by Telekom Malaysia Bhd, was formed to facilitate the securitisation of four properties, namely Menara TM in Bangsar, Menara TM Semarak, TM Taman Desa and TM Cyberjaya.

TM, which sold the properties to MABS, had an agreement to lease the assets, with the option to buy back the assets or extend the lease.

The telco operator said earlier this year that it was in the process of relocating the majority of its corporate offices into its own properties, including TM Annexe 1 and TM Annexe 2 as well as properties in Cyberjaya.

MABS in January defaulted on Tranche A of its sukuk (RM345 million) and Tranche C (RM500 million). It had disposed of TM Taman Desa and TM Cyberjaya to redeem part of the Tranche A sukuk, and was speaking to prospective buyers for the other two buildings.

Amid MABS’ default, RAM Ratings reported that cashflow to redeem the Tranche A sukuk was intended to come from either the refinancing of the sukuk, asset disposal or the “provision of special funding by Tranche C sukukholder” — namely Tabung Haji.

The Employees Provident Fund (EPF) is also a holder of the MABS sukuk.

On its Saudi operations, Mohd Na’im said LTH has leased six hotels in that country to date.

“Property leasing in Saudi Arabia is one of LTH’s initiatives in curbing the rising costs of Malaysian pilgrims' accommodation,” he said.

“Some of these leases faced difficulties due to issues with hotel operators, and worsened by the Saudi government’s move to permit only Saudi pilgrims in 2020 and 2021 due to Covid-19.

“For the leases with problems in Saudi Arabia, efforts have been made, and continue to be made, to ensure the depositors’ interests are protected, including through legal means and a government-to-government approach,” he said.

“These legacy investments have to be properly addressed to ensure that the overall performance of LTH remains competitive. However, efforts are underway to achieve the best solutions to ensure the welfare of LTH depositors,” he added.