Khazanah says no control after repayment of RM1.2b to MoF

Raja Shahreen Raja Othman, who is currently the CEO of Selangor

KUALA LUMPUR: Khazanah Nasional Bhd has no control of the use of the remaining RM1.2bil in redeemable cumulative convertible preference shares (RCCPS) which was repaid to the Ministry of Finance (MoF).

The sovereign wealth fund said on Thursday the redemption of the RCCPS was the repayment of shareholder capital to the MoF. 

“The RCCPS is essentially capital injected that MoF as our 100% shareholder has a right to call back (i.e. redeem) at any time,” it said. 

Khazanah was responding to the Reuters article, “Former Malaysia government used money raised from Khazanah to pay 1MDB dues – sources”. 

It said that on March 7, 2011, a total of RM3bil RCCPS was issued by Khazanah to MoF. 

On March 14, 2014, MoF redeemed RM1.8b of the RM3bil issued. On Aug 11, 2017, MoF redeemed a further RM1.199bil of the remaining RM1.2bil RCCPS. 

“It is important to note that as the sole holder of the RCCPS, MoF possesses the right to redeem the RCCPS at any point of time,” it said. 

Below is the Reuters report:

The government of former Malaysian Prime Minister Najib Razak used money raised from a deal with sovereign wealth fund Khazanah Nasional Berhad to pay for some of the liabilities of state fund 1Malaysia Development Berhad (1MDB), two sources told Reuters.

Khazanah paid the government 1.2 billion ringgit ($301.05 million) in mid-2017 in exchange for redeemable shares that the finance ministry owned, the sources said, adding that the funds were used to pay some of 1MDB's dues to Abu Dhabi fund IPIC.

1MDB had agreed to pay $1.2 billion to IPIC as part of a settlement agreement reached in April 2017 after 1MDB defaulted on its bonds.

The finance ministry did not immediately respond to requests for comment.

Khazanah told Reuters in an e-mail that the ministry of finance exercised its right in August 2017 to redeem outstanding Redeemable Convertible Cumulative Preference Shares amounting to 1.2 billion ringgit, which were issued to the ministry in 2011.

However, it did not comment on whether the funds were used for repaying 1MDB's dues.

Najib's government also used about $500 million raised from a land sale agreement with the central bank to pay some of 1MDB's liabilities to IPIC, Reuters reported earlier.