“The finance ministry (MoF) has agreed to provide LTAT with financial guarantees for it to obtain a RM2 billion loan from financial institutions to implement the (mandatory) general offer (MGO).
“The perception that the government is giving LTAT a cash grant is not accurate. We are only facilitating and (helping them) secure loans from financial institutions because (LTAT) has many payments to make,” said Mohamad in Parliament today.
With the government’s guarantee, he said the interest rate imposed by financial institutions for loans taken by LTAT will “not be excessive”.
Last week, Prime Minister Anwar Ibrahim said MoF had allocated RM300 million to aid LTAT in addressing its liquidity issues, and another RM2 billion by year end to “save” the fund. However, he did not specify if the RM2 billion allocation was a grant or loan.
Anwar’s statement has raised concern among various quarters that the government is contemplating bailing out yet another government-linked entity.
In a surprise turnaround last week, LTAT announced it would be initiating an MGO to buy out BPlant following the collapse of an earlier deal to dispose of its interest in BPlant to Kuala Lumpur Kepong Bhd (KLK).
On Aug 24, KLK inked an agreement with LTAT and its wholly-owned unit Boustead Holdings Bhd (BHB) to acquire a 33% stake plus one share in BPlant for a cash payment of RM1.15 billion.
It would then extend an MGO at RM1.55 per share to raise its shareholding to 65% and delist BPlant. LTAT and BHB, which collectively hold a total of 68%, would retain the remaining 35% stake.
Now, LTAT will have to fork out approximately RM1.11 billion, at an offer price of RM1.55 per share, for the remaining 716.8 million shares, equivalent to a 32% interest, that it does not own.
Mohamad had previously said BHB, which was privatised by LTAT earlier this year, needed RM800 million by year end to meet its debt obligations.
Adding this RM800 million to the RM1.1 billion that it needs for the MGO, LTAT would have been in an extremely tight spot to raise almost RM2 billion.
The government’s move to provide LTAT the financial guarantee to raise up to RM2 billion will give some respite to the beleaguered pension fund.