DON'T JUDGE US, 1MDB warns critics

PETALING JAYA - 1Malaysia Development Board (1MDB), brought into question on its financial standing, health and larger purpose, has defended its business model and dealings, calling any valuation of the group without detailed information wrongly premised and inaccurate.

1MDB has been in the news the last week or two, with one business weekly questioning 1MDB's corporate moves and its ability to meet its mandate of driving investments in strategic sectors, highlighting its high debts and low internal rate of return for its power assets.

Last Friday 1MDB issued a statement saying that it is poised to realise strong strategic value from its energy assets.

It said to give a more accurate representation and valuation of 1MDB's assets it is vital to have a more detailed knowledge of the operations and factor in other considerations such as precedent transactions for acquisitions of controlling stake, discounted cash flow, management expertise and potential growth of the business.

"All 1MDB assets have strong future growth potential, beyond the finite life of assets at purchase period. They come with credible, experienced management which can create further value from the power business."

"All this points to a high value proposition that can be expected to stimulate markets and bring significant FDI and cash profits to the shareholder - the government of Malaysia - as well as enhance competitiveness towards better pricing," 1MDB said.

Exponential growth?

It also explained that it had been given an extension in time to file its annual returns to the Companies Commission Malaysia due to its new business direction since 2012 and exponentially growth which requires the consolidation of several new subsidiaries with large assets worldwide into the 1MDB Group.

It has until March 31, 2014 to file its annual returns and is expected to keep to the deadline.

"This is nothing special or new as it is in line with best market practice where companies decide on its current or future auditors after considering all aspects, including but not limited to conflict of interests and other consideration Deloitte, as a Big 4, will apply equally stringent auditing standards in line with international practice," 1MDB said.

In defending its Cayman-based fund 1MDB said it has invested proceeds with regulated and licensed international fund managers that have an investment objective specifically tailored and aligned to 1MDB's risk/return objective.

It said a total of US$200 million has been remitted from the fund to the 1MDB group in Malaysia to service repayment. Out of this, US$134 million (about RM430 million) is from the 5.76% cash dividend generated within the first year of the investment period. - Sundaily