IJN to raise RM209 mil for expansion of hospital

KUALA LUMPUR, July 29, 2005: Institut Jantung Negara Sdn Bhd (“IJN”),which operates the National Heart Institute here, is raising a total of RM209 million to finance the expansion of its hospital here to meet increasing demands for its services.

The funds will be raised through a Sukuk (Islamic Trust Certificate), under a Sukuk Musyarakah Programme of up to RM209 million to be issued via a special purpose vehicle company, IJN Capital Sdn Bhd (“IJN Capital”), based on the Islamic principle of Musyarakah. RHB Sakura Merchant Bankers Bhd (“RHB Sakura”) is the principal advisor, lead arranger and facility agent for the Sukuk Musyarakah Programme.

Proceeds from the programme will be used by IJN Capital to finance the refurbishment of the existing facilities of the hospital as well as the construction of a new block adjacent to its existing building located on Jalan Tun Razak, close to the Kuala Lumpur Hospital. The project will also include the purchase of medical and non-medical equipment required for the operation of the expanded hospital.

An agreement for the issuance of the Sukuk was signed between IJN Capital as the Issuer, and RHB Sakura today. Signing on behalf of IJN Capital were IJN Chairman Tan Sri Datuk Mohamed Khatib Abdul Hamid and its Chief Executive Officer Encik Mohd Radzif Mohd Yunus. RHB Sakura was represented by its Chairman Encik Abdullah Mat Noh and Chief Operating Officer Puan Jamelah Jamaluddin.

The signing ceremony was witnessed by Dato’ Siti Hadzar Ismail, the Advisor to the Ministry of Finance, who represented Finance Minister II Tan Sri Nor Mohamed Yackop.

Encik Mohd Radzif said the expansion project was part of a commitment by IJN towards providing quality services to its patients. He said the demand for IJN services for both, the number of patients as well as the type of cases that are referred had increased over the years and it was thus imperative that IJN undertook the expansion project.

“We assure the public that all patients especially Malaysians from all walks of life receive the best service equipped with the latest facilities and technologies for their heart treatment. We have not forgotten our social responsibility to ensure the government servants and pensioners and the underprivileged whose treatment charges and hospital bills are funded by the government receive the same quality of treatment at IJN”, he said as a refute to some claims that the expansion plan is meant to cater more for paying patients.

Eighty five percent of our total number of patients is funded by government – government servants and their dependents (spouse, children and parents), government pensioners and underprivileged patients.

IJN currently has 270 beds and that will be increased to 420 under the expansion plan. The project is expected to take three years to complete.

RHB Group Executive Chairman Dato Sri Sulaiman Abdul Rahman Taib said the issuance of the Sukuk for IJN Capital marked yet another effort by the RHB Group towards enhancing the Islamic debt capital market in particular and Islamic finance in general in Malaysia.

He noted that many companies were now opting for Islamic instruments as a means to raise funds to finance projects or new acquisitions. “I am pleased to say that the RHB Group now has the entire range of Islamic products to offer enterprises that seek financing facilities,” he added.

Puan Jamelah said this would one of the first few Sukuk Musyarakah Programme to be issued in Malaysia, to add breadth to the range of Islamic securities currently available on the market, alongside the more traditional Islamic securities which are based on Syariah principles of Bai-Bithaman Ajil (deferred payment sale) and Murabahah (Cost-Plus Sale).

“The basis for the Musyarakah will be a venture for the refurbishment of the existing facilities of the hospital, construction of the new wing and purchase of new equipment to be undertaken via a special purpose vehicle i.e. IJN Capital based on the Islamic principle of Istisna’. Under the Sukuk Musyarakah programme, the investors of the Sukuk are not providing debts, but capital contributions for the venture,” she said. The capital contributions will be evinced by the Sukuk that will be issued by IJN Capital.

She said the programme would allowed IJN via IJN Capital to issue the Sukuk up to a limit of RM209 million as and when funding is needed, based on progress of the expansion. The Sukuk would be issued in a series with tenures of between three and 10 years.

Malaysia Rating Corporation Bhd (“MARC”) has accorded the Sukuk with maturities of seven years or less (from the date of first issue) the highest rating of AAA whilst those with maturities of more than seven years are rated AA+.