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Govt to guarantee EPF’s RM5 billion loan to Valuecap

KUALA LUMPUR, 4 NOV 2008: The government will guarantee the RM5 billion loan from the Employees’ Provident Fund to state investment company Valuecap Sdn Bhd.

Deputy Prime Minister Datuk Seri Najib Razak defended the loan and rebuffed speculation that the loan would only prop up government-linked companies (GLCs) on the stock market.

“Valuecap has the mandate to invest in any company and not just GLCs,” said Najib, who is also Finance Minister I, when presenting additional measures to face the global credit crisis during the winding up of debates on Budget 2009 in Parliament today.

But at a press conference later, Najib evaded questions on whether the EPF loan would be used to pay off Valuecap’s RM5.1 billion debt in the form of interest-bearing unsecured bonds. This debt is due to be repaid in February 2009.

The government recently announced the EPF loan to Valuecap on to invest in the stock market as part of the country’s response to the global financial crisis.

The debt is owed to Valuecap’s three shareholders: Khazanah Nasional, EPF and Permodalan Nasional Bhd. The amount was borrowed in 2003 to invest in the stock market. It was to have been repaid in February 2006, but Valuecap was given a three-year extension.

When asked a few times if the EPF loan would be used for this purpose, Najib said: “The shareholders will decide how the debt should be paid back.”

He did not respond when asked if the EPF loan would be used for this purpose. Instead, he said the shareholders were happy with Valuecap’s performance.

“They have got some returns in the past. Valuecap has performed and the value of shares has increased. It is good for Valuecap to come into the market and it will help give confidence to the market,” Najib said.


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