1MDB president Arul Kanda Kandasamy said RM950 million standby credit from Putrajaya is a loan on commercial terms. – Reuters filepic, March 12, 2015.Debt-ridden state investor 1Malaysia Development Berhad (1MDB) today clarified that the RM950 million standby credit from Putrajaya to the company is a loan on commercial terms.
1MDB president and group executive director Arul Kanda Kandasamy said that the credit facility was part of the company's strategic review of the business, which was announced on February 17 this year.
"The Finance Ministry is fully supportive of these plans and, in its capacity as the 100% shareholder of 1MDB, has provided the company with a standby credit facility to help ensure that it is able to realise maximum value from these plans."
"The facility, of up to RM950 million, is being provided as a loan on commercial terms," said Arul.
On February 17, 1MDB announced the outcome of a strategic review, which began in January, to "enable the company to maximise value for the Finance Ministry and ultimately the people of Malaysia".
During the announcement, Arul said that the company will focus on its core businesses and no new investments or projects will be undertaken.
He added that no new debt will be raised except in order to refinance existing debt/meet existing liabilities, and/or on a non-recourse, project finance basis, as needed.
In today's statement, Arul assured that any funds drawn would be used for clearly defined purposes as agreed with the Finance Ministry.
"We are confident that with this facility from the shareholder, the company is well positioned to effect its previously announced plans, and we are now focused on implementing these to achieve our stated aim of maximising value for all stakeholders." he said.
Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah disclosed the RM950 million standby credit facility in Parliament today, a day after the Singapore Business Times reported that Putrajaya had given the money to 1MDB.
He disputed the business paper's report that Putrajaya had "loaned" 1MDB RM970 million.
Husni also added that the debt-ridden company's cash-flow problems would be solved with an IPO (initial public offering), which had been postponed twice now.
Standby credit is an arrangement with the lender where a fixed amount of credit is made available to the borrower as and when it is required, for a given period.
Criticism has been mounting over the wholly owned Finance Ministry investment vehicle, established in 2009, which has chalked up debts of up to RM42 billion.
Scrutiny of the company grew more intense recently following whistleblower site Sarawak Report's exposés last week that piled pressure on Prime Minister Datuk Seri Najib Razak and prompted opposition politicians, former Umno leaders and anti-graft bodies to demand a thorough investigation into 1MDB.
Last Wednesday, Najib ordered the country's auditor-general to "independently verify 1MDB's accounts", with the findings to be passed to the Public Accounts Committee.
Auditor-General Tan Sri Ambrin Buang said that the national auditor's inspection of 1MDB's account had started, but did not set a time frame to complete the audit.
- TMI
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