KUALA LUMPUR (BLOOMBERG) - The Malaysian state investment company at the center of multiple financial probes said it will repay 6 billion ringgit (S$2.04 billion) in coming weeks as asset sales give it room to pare down debt.
1Malaysia Development Bhd won't have any more short-term debt and bank loans after the repayments, President Arul Kanda said in an interview on Wednesday (March 30) at the fund's headquarters in Kuala Lumpur. It will have a cash surplus of at least 2.3 billion ringgit after settling the debt, he said.
"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 2015. 1MDB announced last week it had settled a 700 million ringgit syndicated term loan.
1MDB, whose advisory board is headed by Prime Minister Najib Razak, has been the subject of overlapping investigations in Malaysia and countries including Singapore and Switzerland amid allegations of financial irregularities. Having almost defaulted on a loan, it announced last year it will 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 unfavorable market. 1MDB owed 42 billion ringgit as of March 2014.
The fund said it won't 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 9.83 billion ringgit.
The sale of 1MDB's assets and other agreements would see its debt reduced by about 40.4 billion ringgit, or the "overwhelming majority" of its obligations, Mr Najib said at the end of last year.