Hydra-like arguments on the sale of Edra.

Dr Mahathir, PM and UMNO president for 22 years, is just a retired former politician. Can UMNO Malays accept this insolent description? They probably can and don’t care because they are just a pliable putty.

Might as well describe Dr Mahathir’s criticisms as senescent musings. Or just say Dr Mahathir is getting senile. See whether these descriptions affect the 3.4 million UMNO members less the 22,000 ketua cawangans, the 48 or more MKT members and the 191 divisional leaders.

UMNO people, those who can read and understand English, must reject this kind of treatment on the greatest UMNO Malay leader. I find it strange as a Malay DAP member, having to defend Dr Mahathir alongside a few other cyber warriors.

I can only justify my stand, because, I am part of the bigger number of Malays who do not subscribe to the values of present day UMNO Malays. Remember, the 3.4 UMNO Malays is just less than 20% of the Malay population of some 18 million.

According to 1MDB, Dr Mahathir just don’t understand- CGC bought edra for RM9.83 billion plus taking over debts totaling RM7.43 billion. Hence CGC bought at EDRA really for RM17.26 billion, breaking even on the RM18 billion price (RM12b plus RM6b), 1MDB bought the IPPs in the first place.

Because of that, Arul Kandasamy is excited. He tells everyone that the sale of Edra Energy for RM9.83 billion at current price, is a vote of confidence for the Malaysian economy. The stock market did rally and the Malaysian Ringgit improved.

It reduces 1MDB debt up almost RM18billion. At the sale price of RM9.83billion, we have broken even.

There are 2 things I find disagreeably troublesome. One, the sale price being a vote of confidence in our economy. Two, broken even means what?

Break even in economics, is the point where total revenue equals total costs. Hence there is no loss or profit. Perhaps, this is what Arul Kandasamy means. If we had not made profits, at least we didn’t make any losses. That’s should be comforting. Shouldn’t it?

That means RM9.83 billion today, is the same as the RM9.83 billion at the time 1MDB bought all the IPPs. That’s one. Two, didn’t we buy the IPPs for RM12 billion. So how can the sale price of RM9.83 billion at today’s price neutralise the RM12 billion?  And we really hope CGN really took over the inherited loan too.

He says Dr Mahathir continues to mislead the public. In other words, Arul Kanda says Dr Mahathir does not understand finance. 1MDB says it gets extra money from the revenue earned while holding the assets for several years. 1MDB says it gets RM2 billion in cash dividends. That would make RM9.83 +2.0= RM11.83 billion. We break even!

CGN also takes over the inherited loan that has become, as stated by 1MDB, RM7.43b. the original inherited loan of RM6b must have accumulated interests. But never mind, CGN has taken over the loan.

 So, with cash of RM9.83b, plus RM2b in cash dividends and RM7.43b debt transfer, we are ok what? So now, let’s find willing buyers for our land and other assets.

There is a flaw in the narration. RM9.83b 4 years ago isn’t the same as RM9.83billion today. 1MDB took financing to purchase the IPPs as well as incur other financial costs. It took loans in both US Dollars and Malaysian Ringgit.

We bought the IPPs at RM12 billion (let’s not talk about inherited debt), and now sell it for RM9.83b. how do we cover the shortfall? We cannot disingenuously add the RM2 billion cash dividends to make up for the shortfall. If we do, than the RM2 billion is just a happenstance winning 1MDB the argument against retired and former politician Dr Mahathir that we recovered our RM12 billion initial purchase price.

What the holding costs? If indeed Edra made RM2.17billion cash dividends, didn’t it need to service the loans it took? They took loans in US Dollars and Malaysian Ringgit , we need to ask, what was the cost incurred in getting the cash dividends? They also paid brokerage fees to Goldman Sachs.t These costs may well overshadow the RM2b cash dividends.

1MDB borrowed both in US Dollars and Malaysian Ringgit. It has to account for the interest payments. What is the net returns then? Add the net value amount( cash dividends minus cost of loan to the sale value. Do they add up to reduction of loans up to RM18 billion?

Who is misleading the public now?

Going back to the beginning, we still cannot cancel out the possibilities of incompetence, recklessness or pure intention of profiteering when we paid RM18 billion for the assets including assuming an inherited loan obligation of RM6 billion.

Why did we do that? Who authorised the purchase of companies with existing loan obligations? The purchase price of RM12 billion (not including the inherited loan) was regarded as an inflated price. Why buy at inflated price when market valuation placed the assets at RM10 billion tops.

We must remember, if we allowed the IPPs to reach shelf life, we could have bought these IPPs at a much lower price. Was it done to help certain people in these IPPS? Or was it done to reap regulatory capture at a future date?

Reports about donations into charitable foundations by some of these IPPS must be viewed with suspicions.

Vote of confidence on our economy? It looks more like an opportunity to buy assets from a desperate seller.

How is that so? That increases our USD Dollar reserves? The sale immediately unlock hitherto unheard of economies? Create jobs, reduces inflation, bring the cost of living down?

Will edra energy be given more quota to supply electricity? Will they be allowed to sell back to TNB at a higher price to recoup this initial investment?

RM9.83 billion in current prices isn’t the same as RM9.83 billion when Edra bought those IPPs then. Part of the loan taken to finance the purchase as pointed out by many was in US Dollars. It was trading at around RM3.2 at that time and now it’s RM4.2. For every USD Dollar we lost RM1.

When 1MDB bought out these IPPs from Genting, Ananda, Jimah Power and so forth, the Malay supremacists from within and outside UMNO were hailing the move as a step of Malay-nising the ownership of these strategic assets. These strategic assets must be in Malay hands.

They are now quiet a church mouse but will respond in caveman-like manner when challenged. Or make police reports asking the police to investigate what has not been established as a crime yet.

Number one- if these assets are strategic, we don’t sell them. It’s like giving up our advantage and that will make us susceptible. Number two, in order to allow Edra to purchase 100% equity, we had to forfeit our legal requirements on foreign ownership. We abandon our legal limitation of 49% foreign ownership.

Number three- the Malay supremacists have to swallow their saliva- the UMNO leadership is selling these assets to the Chinese, Communists and Godless people.

So in the end- it does not matter whether he cat is black or white, as long as it caches mice.