KUALA LUMPUR – Politically linked corporates are eyeing undervalued assets from strategic subsidiaries of Urusharta Jamaah Sdn Bhd (UJSB), the wholly owned special purpose vehicle under Ministry of Finance Incorporated, as well as Lembaga Tabung Haji (LTH), people familiar with the matter tell The Vibes.
A source said cronies are lobbying for TH Heavy Engineering Bhd’s (THHE) fabrication yard and certain land banks owned by TH Plantations Bhd (THP).
“But they are looking at buying the assets for cheap without assuming liabilities.”
UJSB owns 66.45% in THHE, while LTH owns 73.84% in THP.
In the case of THHE, it is understood that, despite talks by the fabricator to acquire privately held ICE Petroleum Sdn Bhd, a profitable company specialising in fabrication as well as mechanical engineering works for the oil and gas industry, businessmen with political connections have been trying to grab the deal for themselves.
THHE remains in the PN17 group for financially distressed companies listed on the Bursa Malaysia but managed to post a net profit of RM1.65 million for the third quarter ended September 30. Year to date, the group remains in the red with a net loss of RM10.96 million.
Meanwhile, THP posted a net profit of RM8.15 million for the second quarter ended June 30 this year but, cumulatively, the plantation group remained in the red with a net loss of RM3.37 million.
Set up in late 2018 to nurse LTH’s non-performing assets, UJSB’s portfolio consists of 80% equities and 20% properties with the entire takeover exercise costing RM19.9 billion since valuations were based on book value, hence the premium.
Currently, UJSB lacks a chief executive after Izad Sallehuddin stepped down from the post on July 9 after the change in government in February that saw the collapse of the Pakatan Harapan regime.
Deputy Finance Minister II Mohd Shahar Abdullah told the Dewan Rakyat yesterday that UJSB posted a net loss of RM9.95 billion from for the financial year ended December 14, 2018 to December 31 last year, due to tough market conditions.
He added that the adverse impact on UJSB’s balance sheet due to a weak economy and Covid-19 was expected, and that the government would inject RM1.78 billion every year to ensure UJSB continues functioning.
For this year, UJSB will pay RM500 million to LTH, of which RM300 million is cash settlement and the rest is the initial redemption of sukuk. – The Vibes, November 26, 2020
Editor’s note: An earlier version of this article wrongfully stated that UJSB, not LTH, is a majority shareholder in THP. The error is much regretted
