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Sunday, May 31, 2015

US$1 billion from Abu Dhabi not a loan, says 1MDB

1MDB says the RM1 billion from Abu Dhabi’s International Petroleum Investment Company will be used to repay a syndicated loan led by Deutsche Bank. – WDfirm.com pic, May 31, 2015.1MDB says the RM1 billion from Abu Dhabi’s International Petroleum Investment Company will be used to repay a syndicated loan led by Deutsche Bank. – WDfirm.com pic, May 31, 2015.

1Malaysia Development Bhd (1MDB) today denied the US$1 bllion it received from Abu Dhabi’s International Petroleum Investment Company (IPIC) was a loan or a bailout.
1MDB president and group executive director Arul Kanda Kandasamy said the money was a business transaction between the two companies, and it would not see 1MDB assuming further debt.
"Further to the Ministry of Finance's statement on 29 May, we have noted with concern claims from certain quarters suggesting that the US$1 billion payment from the IPIC of Abu Dhabi is a loan, or involves 1MDB assuming further debt.
“It is an initial payment as part of a broader agreement to comprehensively address the various financial asset and liability transactions between IPIC, Aabar and 1MDB, further details of which will be announced in due course,” said Arul in a statement.
The funds will be paid by June 4, and will be used for early repayment of a US$975 million syndicated loan led by Deutsche Bank due in September, the Finance Ministry said on Friday.
“The agreement will also include further measures to comprehensively address the various financial asset and liability transactions between the parties, further details of which will be announced in due course,” Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah had said.
“This agreement marks a significant step towards reducing 1MDB’s overall debt levels, and is a crucial part of the rationalisation plan I presented to Cabinet earlier, which we expect to be implemented in full by early next year.”
On Friday, Husni presented the Cabinet 1MDB'a rationalisation plan.
In its May 13 report, Singapore's Business Times reported that the six "jittery lenders" led by Deutsche Bank 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 of end-August.
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 (PAC) started its own investigation into the company last Tuesday.
- TMI

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