Arul: 1MDB fully redeemed investment in Cayman Islands registered fund

  • Business
  • Wednesday, 14 Jan 2015

KUALA LUMPUR: 1Malaysia Development Bhd (1MDB) has fully redeemed the balance of US$1.103bil (RM3.92bil) from its investment totalling US$2.318bil (RM8.24bil) in a Cayman Islands-registered fund, according to newly appointed president and group executive director Arul Kanda Kandasamy.

“1MDB hopes that the redemption of these funds, in full, draws a line under this matter. 1MDB can confirm that it has now redeemed the US$2.318bil invested by the company in a Cayman Islands-registered fund, following a commitment made by the chairman of the board of directors on Dec 23, 2014,” he said in a statement yesterday.

According to 1MDB, the funds originated from the repayment of a loan provided to PetroSaudi International Ltd in 2011 in the form of murabaha notes, following the termination of an earlier agreement to enter into a joint-venture with the company.

The notes, which were paid back with interest, were subsequently invested in a fund under the regulatory supervision of the Cayman Monetary Authority.

1MDB had previously redeemed US$1.215bil, representing 60% of the funds invested.

However, in the statement, 1MDB did not elaborate on the utilisation of the proceeds which were recently redeemed.

The strategic development company, wholly owned by the Government, was previously scrutinised over concerns about its financial health and obligations.

It was also struggling to complete the submission of the listing of its power-generation unit, which has been touted to raise US$3bil (RM10.5bil), which is crucial for the fund to pare down the debts it had accumulated to acquire power plants since 2012.

It was reported that the appointment of Arul was “part of a transition plan”.

The board also announced that 1MDB would undertake a strategic review to explore and determine a course of action that would allow the company to maximise returns for all its stakeholders.

For the financial year ended March 31, 2014, the group registered a loss of RM665.3mil largely due to higher finance costs of RM2.4bil.

However, the value of the group’s asset base increased to RM51.4bil, compared with RM44.6bil the previous financial year, with borrowings increasing from RM36.2bil to RM41.9bil.

1MDB’s portfolio includes the 15 power and desalination plants in five countries that comprise its energy business, property that includes 70 acres of prime real estate currently being developed as the Tun Razak Exchange, 495 acres of land on the site of the old airport in Sungai Besi earmarked for the Bandar Malaysia development, and 234 acres of land in Air Itam, Penang.

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