KUALA LUMPUR – The restructuring of diversified group Boustead Holdings Bhd is crucial for reducing the Armed Forces Fund Board’s (LTAT) dependence on its income, said the Defence Ministry.
Datuk Seri Mohamad Hasan said the reduction in holdings in Boustead will have a long-term positive impact on LTAT, which is a government statutory body that provides benefits via a retirement savings scheme for officers and members of other ranks of the military.
The positive impact includes increasing asset diversification from almost 50% to just 15% for Boustead and increasing liquid assets investment from 20% to at least 60%.
“This also includes recovering LTAT’s total investment in Boustead of RM3.3 billion to enable the pension fund to reinvest in assets that are competitive, as well as being able to provide stable and consistent returns to increase the value of its investment assets – which are now worth RM10 billion – through Boustead’s restructuring programme,” he said in the Dewan Rakyat today during the minister’s briefing session on the issues and challenges faced by LTAT.
The defence minister also said that if the restructuring was not implemented, Boustead would not be able to repay its financial obligations and this would trigger a cross-default on all loans under the conglomerate amounting to RM6.8 billion.
Boustead is also at risk of bankruptcy, resulting in half of the value of LTAT’s retirement fund, which is almost RM5 billion, declining and being wiped out, if the restructuring is not implemented, he added.
Regarding a proposed general offer on all shares of Boustead’s subsidiary, Boustead Plantations Bhd, the Finance Ministry has agreed to provide a government guarantee to LTAT to obtain a loan of RM2 billion from financial institutions to execute the general offer.
“To ensure that this government guarantee is utilised, I will ensure that LTAT will implement restructuring in accordance with the Strategic Plan 2023-2025,” Mohamad Hasan said. – October 9, 2023