SINGAPORE - Malaysia's debt-laden state fund 1Malaysia Development Bhd (1MDB) settled a RM2 billion loan on Thursday with money from billionaire T. Ananda Krishnan, six days before bankers triggered a default, the Malaysian Insider reported on Friday morning, quoting bankers familiar with the matter.
The newspaper reported on its website that that the banks involved received the money on Thursday evening, hours after Ananda, Malaysia's second-richest man, was said to have agreed to the bailout.
Other sources confirmed the repayment of the RM2 billion, owed to several Malaysian lenders, for the second tranche of a RM5.5 billion bridging loan, the paper said.
The payment is a last-minute reprieve for 1MDB, whose debt woes were seen as pressuring the ringgit and Malaysia's sovereign credit rating. 1MDB subsidiary, Powertek Investment Holdings Sdn Bhd, took out the loan last May to refinance a RM6.17 billion bridging loan taken in 2012 to part finance the purchase of power assets.
Parent 1MDB, whose advisory board is chaired by Prime Minister Najib Razak, has amassed RM42 billion in total debt as it built up a large portfolio of power plants.
Ananda sold his collection of power plants to 1MDB and his company Usaha Tegas is the guarantor for the RM2 billion bridge loan. Sources have also said that he is in talks with 1MDB to become a cornerstone investor in the long-delayed US$3 billion listing of its power assets.
1MDB restructured the RM5.5 billion bridging loan into two tranches: a RM3.5 billion loan due by August 2024 and a RM2 billion loan due last November, said the Insider.
Malaysia's Maybank has 58.99 per cent of the RM2 billion loan while RHB has 32.41 per cent. The other lenders are Alliance Investment Bank Bhd (4.06 per cent), Malaysia Building Society Bhd (3.24 per cent) and Hwang DBS Investment Bhd (1.29 per cent).
1MDB has been heavily criticised for taking on so much debt and the difficulty in repaying its loans. Among its harshest critics are former prime minister Tun Dr Mahathir Mohamad and former finance minister Tun Daim Zainuddin, apart from opposition lawmakers who say its debts are a risk to the country's financial system.
Fitch Ratings, which has put Malaysia's A-minus credit rating under review with a negative outlook, said it has concerns over Malaysia's fiscal position and contingent liabilities such as those from 1MDB.
The opposition has also queried 1MDB's financial health after 1MDB president and group executive director Arul Kanda Kandasamy told Singapore's Business Times over the weekend that the remaining RM3.91 billion Cayman Islands funds will not be repatriated back to Malaysia.