US$975 million loan repaid, says 1MDB

1MDB says it has repaid its US$975 million syndicated loan led by Deutsche Bank. – The Malaysian Insider filepic, June 8, 2015

Troubled 1Malaysia Development Bhd (1MDB) announced today it had repaid its US$975 million loan to a consortium of international banks, which was due in September.

1MDB president and group executive director Arul Kanda Kandasamy said the repayment proved its commitment to reducing its debt.

"On May 29, 2015, the Ministry of Finance announced 1MDB’s plan to repay a US$975 million (RM3.6 billion) loan to a syndicate of international banks," said Arul Kanda in a statement today.

"Today, we are pleased to confirm that the loan has been fully repaid. This RM3.6 billion repayment reflects 1MDB’s commitment to reducing its debt levels, in line with the rationalisation plan approved by Cabinet."

On May 29, the Finance Ministry said 1MDB'S Middle East partners would inject US$1 billion into the debt-laden strategic fund on June 4 for early repayment of the syndicated loan led by Deutsche Bank.

1MDB later said the funds from Abu Dhabi was a business transaction, and denied it was a loan or a bailout.

In its May 13 report, Singapore's Business Times reported that the six "jittery lenders" had turned "panicky" because the loan was secured by 1MDB's wholly-owned Brazen Sky's US$1.103 billion – money which is currently being parked at BSI Singapore, a Swiss-based private bank.

The business daily, in quoting sources, said "securitisation document" for the loan was now deemed "incomplete", as one of the covenants was not fulfilled.

This meant lenders could demand for repayment from the state investment vehicle any time before its due date.

On April 22, whistleblower Sarawak Report said 1MDB’s account in BSI Bank merely contained “paper assets”, the “true value of which cannot be determined”.

In a parliamentary reply to DAP's Tony Pua, Putrajaya revealed that the balance of the investment redeemed by 1MDB were assets in US dollars.

Criticism has been mounting over the Finance Ministry's wholly-owned investment vehicle, established in 2009, which has chalked up debts of up to RM42 billion, backed by Putrajaya.

Scrutiny has grown more intense following recent exposes which piled pressure on Prime Minister Datuk Seri Najib Razak and prompted opposition politicians, current and former Umno leaders, including long-serving former prime minister Tun Dr Mahathir Mohamad and anti-graft bodies, to demand a thorough investigation into the fund.

The Auditor-General is currently looking through 1MDB's books, with a preliminary report expected to be submitted to the Parliament in June, while Parliament's Public Accounts Committee started its own investigation into the company.

- TMI