1MDB to repay $2.1b in debt in coming weeks

1MDB will not have any more short-term debt and bank loans after the repayments, said its president Arul Kanda.
1MDB will not have any more short-term debt and bank loans after the repayments, said its president Arul Kanda. PHOTO: REUTERS

KUALA LUMPUR • The Malaysian state investment company at the centre of multiple financial probes said it will repay RM6 billion (S$2.1 billion) in the coming weeks as asset sales give it room to pare down debt.

1Malaysia Development Berhad (1MDB) will not have any more short-term debt and bank loans after the repayments, its president Arul Kanda said in an interview yesterday. It will have a cash surplus of at least RM2.3 billion after settling the debt, he added.

"All the short-term debt, all the bank debt will be repaid" within the next three weeks, said Mr Kanda, a trained lawyer who has led the fund since January last year.

1MDB announced last week it had settled a RM700 million syndicated term loan. The state-owned company, whose advisory board is headed by Prime Minister Najib Razak, has been the subject of overlapping investigations in Malaysia and countries such as Singapore and Switzerland amid allegations of financial irregularities.

Having almost defaulted on a loan, it announced last year it would transfer much of its business to standalone entities.

1MDB has consistently denied wrongdoing.

Set up by the government in 2009 to build infrastructure with borrowed money, 1MDB started facing cash flow problems in 2014 after a planned initial public offering of energy unit Edra Global Energy faced delays amid an unfavourable market. 1MDB owed RM42 billion as of March 2014.

The fund said it will not make any new investments or undertake projects once it wraps up some existing deals.

1MDB has now sold Edra to China General Nuclear Power Corp for RM9.83 billion.

The sale of 1MDB's assets and other agreements would see its debt reduced by about RM40.4 billion, or the "overwhelming majority" of its obligations, Datuk Seri Najib said at the end of last year.

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A version of this article appeared in the print edition of The Straits Times on March 31, 2016, with the headline '1MDB to repay $2.1b in debt in coming weeks'. Print Edition | Subscribe