Khaled says he has no issue with LTAT restructuring plan, but sale of companies needs 'careful consideration'

TheEdge Tue, Feb 27, 2024 12:57pm - 3 months View Original

KUALA LUMPUR (Feb 27): The restructuring plan of the Armed Forces Fund Board (LTAT), which involves plans to restructure the business model and shareholdings in several strategic companies, needs to be managed more carefully and meticulously, said Defence Minister Datuk Seri Mohamed Khaled Nordin.

Khaled said that he personally does not have any issues with the overarching strategic plan, SUSTAINABLE25, aimed at restructuring LTAT. 

However, specific proposals involving the restructuring of the business model and the management of shareholdings, including the sale of assets and disposal of shares in several strategic companies, need careful consideration, he said.

"We are seeking a win-win situation, where the LTAT strategic plan will not adversely affect the companies, and the shareholdings of LTAT in its subsidiaries can be maintained at a level that allows LTAT to retain control.

"In any strategic plan, we do not want to merely overcome asset liquidity — rather, we face a problem with sustainable dividends, due to LTAT losing control of its subsidiaries," Khaled said in response to Datuk Mohd Isam Mohd Isa (Barisan Nasional-Tampin) during ministerial question time in the Dewan Rakyat on Tuesday.

SUSTAINABLE25, aiming to reorganise LTAT, commenced towards the end of 2021 as a multi-strategic initiative, with the objective of changing the asset allocation portfolio of the fund, managing approximately RM10 billion.

One of the key proposals in the restructuring plan was for LTAT to privatise Boustead Plantations Bhd by selling an initial 33% stake to Kuala Lumpur Kepong Bhd (KLK) for RM1.15 billion. 

This was on the heels of an RM703 million privatisation of LTAT's flagship company Boustead Holdings Bhd.

The plan aimed for LTAT to have a balanced portfolio, diversifying away from its focus on Boustead, monetising some assets, and being positioned to pay out higher dividends sustainably by 2025.

However, political concerns regarding the dilution of Bumiputera equity in the sale to KLK led to the scrapping of the Boustead Plantations deal. Subsequently, LTAT decided to privatise the planter itself with a government injection of RM300 million, and a government guarantee for a RM2 billion loan.

Following a Cabinet reshuffle on Dec 12 last year, Mohamed Khaled was appointed to lead the Ministry of Defence, taking over from Datuk Seri Mohamad Hasan.

Shortly after, The Edge reported that those involved in the restructuring of LTAT were instructed not to proceed with any work, pending a review by Khaled.

Coincidentally, three senior officers of LTAT resigned, starting with chief executive officer Datuk Ahmad Nazim Abd Rahman on Jan 31, followed by chairman Tan Sri Raja Mohamed Affandi Raja Mohamed Noor on Feb 8.

On Feb 19, LTAT senior strategic director Dayana Rogayah Omar also reportedly tendered her resignation.

For more Parliament stories, click here.

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