KUALA LUMPUR: With the conclusion of its debt rationalisation plan, 1Malaysia Development Bhd (1MDB) can now heave a sigh of relief as it waits for the measures to take effect.
With an initial debt amounting to RM42 billion, 1MDB began its six-month debt rationalisation plan in June last year which was expected to conclude by yesterday.
1MDB president and group executive director Arul Kanda said 1MDB’s assets would ultimately end up as standalone companies.
“As part of the rationalisation plan, there was a discussion that ultimately, the assets of 1MDB will become standalone companies — Tun Razak Exchange (TRX), Bandar Malaysia, Edra Global Energy Bhd and others. That was what we had envisaged as part of the rationalisation plan.
“With the success of the sale of Edra, we have decided to hold 40 per cent of Bandar Malaysia and at the moment, we still own 100 per cent of TRX.
“From the time the rationalisation plan was announced until today, given the valuations we have achieved and the impact on our cash flows and our repayment, we have managed to reorganise how or what we sell and how much we sell,” he said after the execution of the share sale and purchase agreement to sell its 60 per cent stake in Bandar Malaysia Sdn Bhd.
1MDB, after going through a challenging 2015, has managed to complete the rationalisation plan within six months, with the final step being the sale of the said land for RM7.41 billion.
Arul said the firm could now focus on developing standalone entities, such as Edra, International Petroleum Investment Company (IPIC), Bandar Malaysia and TRX.
He said the first move in the rationalisation plan was achieved through the debt-for-assets swap with IPIC, which reduced 1MDB’s debt by RM16 billion.
The second move was completed with the sale of all its energy assets.
1MDB initiated the sale through the execution of a share sale and purchase agreement on November 23.
The sale would reduce its debts by up to RM17 billion once the transaction is completed by next month.
“And now, on the last day of the year (December 31), the end of the six-month period that was promised by Prime Minister Datuk Seri Najib Razak, we have achieved the final piece of the puzzle,” said Arul.
On whether the 40 per cent stake owned by 1MDB would be transferred to the Finance Ministry, Arul said the matter had yet to be decided.
“At the moment, it is owned by 1MDB but the option always remains, if it becomes a stand-alone company, whether the stake will be owned by the ministry, how that stake gets transferred and what gets paid, is not even being considered yet as at this stage.
“In terms of profitability of the sale, in effect it is valued at RM4.2 billion but the final numbers should be announced by the end of June.”
Arul further emphasised the firm’s commitment to remain true to its primary objectives of the land sale.
“Our main objective is to sell to Malaysian companies and government-linked companies and to invite additional development partners to participate.
“Of course, to promote more foreign direct investments, we aim to market Bandar Malaysia land to foreign parties.
“From 2018, we will be able to invite local and foreign investors to come in to Bandar Malaysia.
We will then open to bidders as well, to the best developer who can contribute to the various components in the new city of Bandar Malaysia. “Development partners would honour the commitments made by 1MDB, such as the base relocation, sukuk, affordable housing, preserving the military museum and the historic air control tower, and so on. I am pleased to see that development partners have given that commitment to respect them,” added Arul.
–NEW STRAITS TIMES