KUALA LUMPUR – Sovereign wealth fund Khazanah Nasional Bhd continues to make headlines for all the wrong reasons.
With one failed investment after another, a disturbing pattern seems to emerge with Khazanah rather going into liquidation than fulfilling its contractual obligations.
Currently engaged in legal battles, TAR PH Sdn Bhd, a subsidiary of Khazanah’s hospitality arm Themed Attractions Resorts & Hotels (TAR&H) Sdn Bhd, is facing a winding-up petition lodged by Jana DCS Sdn Bhd.
Court documents indicate that TAR PH allegedly failed to comply with a statutory demand for payment from March 10 last year.
TAR PH owns JEN Johor Puteri Harbour Hotel in Iskandar Puteri, which was run by Shangri-La until its closure on May 9 this year.
With the closure of the hotel, the winding-up petition filed at the Shah Alam High Court states that TAR PH has no income stream to settle its debt currently valued at RM94.746 million.
This debt is rooted in an arbitration award favouring Jana DCS, amounting to RM89.262 million after TAR PH wrongfully terminated a 2012 agreement over the supply of cooling loads to the hotel.
This comes on the heels of a voluntary winding-up of another TAR&H subsidiary on June 11, 2020 following the failure of KidZania Singapore.
It is understood that TAR&H is also in arbitration and other suits with other contractors.
Setting a precedent?
Reports earlier this year indicated that KidZania Singapore’s non-movable assets were procured by theme park operator Sim Leisure Group for a mere SG$110,000 (RM379,398).
TAR&H’s KidZania Singapore owns an 80% stake in Rakan Riang Pte Ltd, while Boustead Curve, a Boustead Holdings subsidiary, possesses the remaining 20%.
Initially, Khazanah injected SG$48 million (RM165.52 million) into the project.
Yet, the theme park’s alleged mismanagement resulted in it owing SG$53.4 million (RM184.17 million) to creditors, a substantial portion of which, around 93%, was directed to Theme Attractions Resorts & Hotels (TAR&H).
Corporate documents reflected that Rakan Riang’s assets, valued at SG$50 million in 2017, plummeted to SG$6.578 million by 2019.
By the end of 2019, recorded losses had surged to SG$87.839 million.
Not just KidZania Singapore
Parallel circumstances are observed in Khazanah’s KidZania project in Malaysia as ineffective management is believed to have compelled Khazanah to sell the theme park in Mutiara Damansara to Sim Leisure Group for RM3.8 million.
It is believed that KidZania Malaysia, also through a joint venture between Khazanah and Boustead Holdings, required an initial investment of RM90 million for construction and pre-operating expenses.
Khazanah has pumped over RM550 million into TAR&H to keep the leisure business going.
The entity netted losses of RM37.23 million, RM52.41 million, RM32.51 million, RM398.64 million, RM539.36 million respectively, for the financial years 2015 to 2019.
This also mirrors the failure of Khazanah’s foray into the film production sector, where Iskandar Malaysia Studios was sold to G.H.Y. Culture & Media Holding Co Ltd, a Singaporean content firm, at a substantial loss.
US-based Variety magazine highlighted in April that the initial investment stood at around RM748 million, funded by the Strategic Iskandar Fund (SIF) and a grant from the Public-Private Cooperation Unit (PPP Unit) of the Prime Minister’s Department.
Reports indicated SIF provided RM100 million, while the PPP Unit granted RM150 million.
The studio’s final sale was executed to G.H.Y. Culture & Media for RM32 million.
Prime Minister Datuk Seri Anwar Ibrahim had in June expressed concern over Khazanah’s performance, particularly the KidZania fiasco, saying he would meet with the Khazanah leadership to get answers and solutions.
As prime minister, Anwar is also Khazanah chairman.
Khazanah’s current managing director is Datuk Amirul Feisal Wan Zahir while Stephanie Saw has been TAR&H group CEO and managing director since April 2019. – August 22, 2023