Sukuk proceeds to be utlised for loan repayment, working capital

KUALA LUMPUR: Proceeds from the RM9.9 billion sukuk to be issued by the Federal Land Development Authority (Felda) will be used to repay existing loans and working capital, said Tan Sri Abdul Wahid Omar, chairman of the special task force which had been set up to address Felda issues.

Additionally, Felda will also reclaim the 351,000 hectares it had leased to FGV Holdings Bhd and restructure its debts owed to financial institutions, which currently stands at RM10.6 billion under its new recovery plan.

In a statement on Wednesday, Minister in the Prime Minister’s Department (Economy) Datuk Seri Mustapa Mohamed said the Cabinet has agreed with Felda’s proposals to restructure its debt, as well as to increase its core income by terminating the Land Lease Agreement (LLA) with FGV Holdings.

He said the government agency faced serious problems that needs to be addressed immediately as Felda plays an important role in the country’s development.

In a report tabled in the Parliament on Oct 14, the task force highlighted several major issues faced by Felda which required immediate attention, including an unsustainable capital structure and a high debt burden.

The state of affairs was also due to declining sources of income, particularly the payments received from FGV Holdings for the lease of 351,000 hectares of plantation land and lower shared profit in comparison to the projected amount under the LLA.

The situation was also exacerbated by poor governance and financial management. – BERNAMA

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