1MDB accounts reveal TRX money trail

1Malaysia Development Bhd (1MDB) used nearly half of the US$3bil (RM9.3bil) raised as seed capital for work on the Tun Razak Exchange (TRX) to repay its debts and as working capital.

It is not disclosed if the amount utilised as working capital was channeled towards developing the massive project.

The capital raised was earmarked for investments in strategic and high-impact projects such as the TRX development. Its latest financial accounts reveal that 1MDB has placed US$1.56bil, the remaining amount of the US$3bil raised for the TRX project, with a reputed financial institution.

“In 2014, the remaining net proceeds (US$1.56bil) have been utilised by the company for working capital and debt repayment purposes. In the previous financial year, the remaining net proceeds had been placed in time deposits and cash accounts with the said financial intitution for the purpose of cash management,” it says in its financial report.

1MDB Global Investments Ltd, a subsidary company, issued debt worth US$3bil on March 19, 2013, and in April of that year, 1MDB said: “The proceeds from the US$3bil capital raised are being utilised for investments in strategic and important high-impact projects like energy and strategic real estate, which are vital to the long-term economic growth of both countries.”

The accounts also revealed the movements of 1MDB’s US$2.3bil (RM7.1bil), which are proceeds from its 1MDB-PetroSaudi International joint venture (JV), which had been placed with a fund in the Cayman Islands.

1MDB in its latest annual report revealed that the monies that are placed in the segregated portfolio company in the Cayman Islands, amounting to US$2.33bil, are to be returned to Malaysia no later than the end of the year, and that so far, it has received US$1.22bil.

The balance, including a dividend of US$131.7mil, will be returned to 1MDB by the end of this month, according to the accounts.

This is based on a decision taken by the board of directors on Aug 1 this year, authorising the redemption to be not later than Dec 31 this year. The chairman of the board is Tan Sri Lodin Wok Kamaruddin.

The latest report also says that the fair value of 1MDB’s investments as at end-March this year was RM12.9bil, and the company has classified these investments as assets available for sale, as the management of 1MDB intends to liquidate the investments to fund the TRX project undertaken in a 50:50 JV company.

A feature of assets under management is that they would not be subjected to `mark to market’ valuations, meaning they would not be subjected to current market valuations.

TRX is undertaken by Abu Dhabi Malaysia Investment Company (ADMIC), 1MDB and its partner Aabar Investments PJS.

The project is estimated to generate a gross development value of RM26bil and attract 250 of the world’s leading companies, creating 40,000 new job opportunities for knowledge workers, the company said in its April statement last year.

1MDB , TRX , funding , money