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Thursday, December 31, 2015

1MDB sells off 60pct stake in Bandar Malaysia



1MDB is selling 60 percent of its stake in Bandar Malaysia Sdn Bhd to a consortium consisting of Iskandar Waterfront Holdings (IWH) Sdn Bhd and China Railway Engineering Corporation (CREC) Sdn Bhd.
They held a signing ceremony at the Royale Chulan Hotel in Kuala Lumpur today with their two new partners.
The 60 percent stake sold to the consortium is worth RM7.41 billion, said 1MDB chief Arul Kanda Kandasamy, while the current evaluation of Bandar Malaysia places its total value at RM12.35 billion.
Upon execution of the share sale and purchase agreement, he said 1MDB will receive a deposit of 10 percent, which is RM741 million.
They will then discuss the payment option for the balance with the consortium, whether it will be upfront cash or a different payment option, he said.
He also stressed that the consortium will be taking up the promises made by 1MDB in the development of Bandar Malaysia such as affordable housing.
On concerns that 1MDB is selling yet another one of its assets to a foreign company, he pointed out that within the consortium, it is a 60:40 joint venture between IWH and CREC.
This means that CREC only has 40 percent ownership in the consortium, and once 1MDB's remaining stake of Bandar Malaysia is taken into account, the total ownership is only 24 percent foreign, he said.
"It's a win-win partnership, with the majority of it Malaysian-owned," Arul Kanda explained.
This deal is the final major milestone in 1MDB's rationalisation plan, he said, following the execution of the binding term sheet with International Petroleum Investment Co (IPIC) and the sale of Edra Global Energy to China General Nuclear Power Corporation (CGN).
The rationalisation plan was to help turn the troubled state fund around, which had previously reported a debt of RM42 billion.
Asked what 1MDB plans to do with the RM7.41 billion from the deal, he said it is a "nice position" to be in given the challenges 1MDB is facing.
"I'm going to take the weekend to think about that," he said. -Mkini

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