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Friday, January 30, 2015

Alamak !! "Pendatang" To Bail Out 1MDB !

This news broke whatever 'wa' or peaceful harmony that our country had this morning. This is from Malaysian Insider here :  


BY HO KAY TAT AND JOSE BARROCK


  • Ananda Krishnan said to have firmed up agreement with 1MDB. 
  • loan beleaguered 1MDB RM2 bil to help settle Maybank & RHB due end Jan
  • however merely an interim measure
  • (AK and 1MDB) still looking at how to resolve the issue   
  • (In other words, how hard AK can squeeze 1MDB)
  • 1MDB & AK in quandary over how to settle RM2 b debt due in Nov '14
  • 1MDB given two one-month extensions 
  • part of larger exercise by 1MDB on RM6.17 billion loan due last year
  • debts refinanced into 
  • i.  RM3.5 b 10-year term loan secured against Powertek (PIH)
  • ii. RM2 b facility due on November 30 last year. 
  • RM2 billion loan secured after commitment by AK to inject same sum into PIH
  • enable PIH to pay lenders
  • snag because AK (get) majority stake in PIH
  • 1MDB would lose control of PIH, not politically tenable
  • Maybank/RHB waited to be paid  
  •  (this is a polite way of saying Maybank/RHB will suffer RM2b losses)
  • 1MDB and AK looking at various options to break deadlock 
  • finally opted for a loan from AK to 1MDB
  • not yet done, terms of loan to be agreed, looks like only option
  • even then, this is an interim solution so that the banks get paid
  • 1MDB after-tax losses of RM665.4 million in (FY14)
  • bleeding more severe had it not revaluated gain RM896.8 million on property 
  • FY14, long-term borrowings ballooned to RM33.5 bil, up  RM7.2 bil or 27% 
  • 1MDB short-term borrowings of RM8.3 billion.
  • 2014, 1MDB cash & bank balances RM3.8 bil, down 42% from RM6.7 bil in FY13. 
  • cash used to pay high interest charges and existing borrowings
  • 2014, 1MDB paid RM2.4 billion in finance costs. – The Edge Financial Daily

My comments :

1. First things first. Where is Mr Arul Kanda? Why has he gone absolutely quiet. Run silent, run deep?  And what is he exactly? President or CEO or both? Y'day a commenter said Arul Kanda is Executive Director only (as well as president) while the "old" CEO is still the CEO as well as the Managing Director. (This is according to 1MDB's website). So does 1MDB now have an ED as well as an MD? And a president as well as a CEO? Bayar gaji dua kali kah? 

2. Arul Kanda said that 1MDB had brought back that US2 bil or something from the Cayman Islands. Tun Dr Mahathir asked 'In which bank have you deposited that RM2 bil AFTER bringing it back from the Caymans?"  It looks like the money has been deposited in the Piggy Bank. Because no domestic bank has seen that RM2 billion.

3. And now considering that Ananda Krishnan has been called to do national service (to the tune of RM2 bil) to give 1MDB an extra RM2 bil emergency loan, it means that the money is not even in the Piggy Bank. Obviously then, there is no RM2 billion available to pay Maybank and RHB. 

4.  From Malaysian Insider's report above, Ananda Krishnan has already given RM2 bil to Powertek Industry Holdings.   "RM2 billion loan secured after commitment by AK to inject same sum into PIH ". Wow! And another RM2 bil now. 

5. The question is what does AK get in return? Surely 1MDB has no cash. So AK will negotiate for a higher stake in 1MDB's IPO. He will ask for more shares. Why not? He is saving their butts.

6. The question is what is the price that AK will offer for the IPO shares? Remember AK is saving their butts. AK can state his price. 

Dont worry about losing control to the 'pendatang'. Just structure a mandatory 'call' option at an agreed price. A mandatory call - 1MDB need not lose control of the listed company. But they must be prepared to pay.  (I can see AK's boys smiling).

7. The other theories are : AK will negotiate for a stake in the mother company 1MDB. Subsequent to that 1MDB will take over TNB. Or maybe take over a portion of TNB's power distribution business.  TNB's power distribution business may be broken into zones or regions. Northern region, Southern region, Central region, Eastern region etc. So 1MDB will have a stake in the broken up TNB and AK will have a stake in 1MDB.

This is not a crazy idea. Only the people behind the idea are crazy. For example this guy who "took over" a power plant in Kulim, Kedah (which used to belong to the company where I was a director) may be rejoicing at the idea to break up TNB.

If TNB's power generation and distribution is broken up, 1MDB and some favoured cronies can buy a broken up TNB. 

Lets get back to reality. This RM2 bil loan from AK will be an interim measure. Where is all that cash that 1MDB said they have brought back from the Cayman's?

Dr Mahathir did ask :  "In which bank have they deposited that cash which they brought back from the Caymans?"

Arul Kanda did say that the cash has been brought back. Why the need for AK to bail out 1MDB.

Finally, where is Arul Kanda?  Cat got his tongue ke apa?

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