KUALA LUMPUR – 1Malaysia Development Bhd (1MDB) can repay debts and resolve cash flow issues if the rationalisation plan being currently undertaken is unimpeded.
1MDB, a strategic development company, wholly-owned by the government has faced a very challenging period, including various investigations, Prime Minister Datuk Seri Najib Tun Razak said.
He noted that concrete measures were being undertaken to address the issues, including the rationalisation plan, that would bring down its debt level.
“If (the rationalisation plan is) allowed to continue unimpeded, it will allow the company to pay off outstanding debts and resolve the cash-flow issues,” he said at the Global Transformation Forum here today.
Najib, who is also the Finance Minister said: “We must wait for the outcome of the investigations and if any evidence of wrongdoing is found, I can assure that, the strictest action will be taken against those responsible.”
In respect of claims of wrongdoing, he said, there are a number of investigations, some in Malaysia, “which I myself ordered.”
In a statement recently, 1MDB said its rationalisation plan was being implemented, as scheduled.
The fundamentals of the plan involves, amongst others, a “debt for asset swap” with International Petroleum Investment Company (IPIC), sales of equity in Edra Energy and Bandar Malaysia, alongside the sale of master-planned land in the Tun Razak Exchange (TRX) and disposal of non-core assets.
The combined proceeds from the rationalisation plan will substantially reduce 1MDB’s debt, to a sustainable and manageable level by fourth quarter 2015.
Among others, 1MDB successfully sold in 2015, over RM1 billion worth of land in the TRX.
Final, binding bids will be received from domestic and international shortlisted bidders for both Edra Energy and Bandar Malaysia between mid-end October 2015, with the Sale & Purchase Agreements (SPA) for both assets being executed by December.
According to 1MDB, it has also consistently met, with no default, its interest service and principal repayment obligations, to both foreign and domestic lenders.
The government has guaranteed RM5.8 billion of 1MDB debt, of which, RM5 billion is due only in 2039.It also provided a Letter of Support for a US$3 billion bond issued by 1MDB, due in 2023.
At current exchange rates, the principal amount of this long term debt is about RM18.7 billion, it was quoted as saying.