The pilgrims’ fund had paid out 6.25% in dividends or hibah in 2017.

“The depositors should not expect too much for 2018,” said Zukri at a press briefing here today.

The organisation ran into trouble when it declared a dividend for 2017 when its liabilities exceeded its assets, contravening Section 22 (3) (a) of the Tabung Haji Act 1995. The section clearly spells out that TH cannot pay a dividend if its assets are less than liabilities and that dividends must only be paid if there are distributable profits.

Zukri said if the position was not rectified, it would mean that the organisation would not be in a position to pay out dividends in the future.

The board of TH decided that the underperforming assets of the organisation would be transferred to a special purpose vehicle (SPV) under the ministry of finance to arrest the decline in the value of the assets.

The transfer would eliminate these toxic assets from TH’s balance sheet and enable the SPV to rehabilitate the assets.

A total of 106 equities were transferred with a minimum of 20% of unrealised loss with the highest being 96.5% loss. The top 10 losers accounted for almost RM4.6 billion of unrealised losses. The stocks were mainly from the plantation, oil and gas, property and construction sectors.

There were also 29 properties and land transferred to the SPV. Eighteen plots of these land have zero income and were mainly vacant. Zukri said that these lands were illiquid and not in line with the organisation’s new liquidity framework.

The total amount of assets transferred was worth RM19.9 billion and in return, the SPV will issue a sukuk for RM10 billion with a tenure of seven years and redeemable convertible preference shares (RCPS) of RM9.9 billion.

Another measure announced in the turnaround plan was that TH will be put under the supervision of Bank Negara Malaysia. Previously it was administered by the board and the minister in charge of it.

Zukri said that this move would enhance the corporate governance of TH.