1MDB shakeup proposal will be tabled to Cabinet

An IN-DEPTH report on the proposed restructuring of cash strapped 1Malaysia Development Bhd (1MDB) will be tabled to the Cabinet next week, as the last resort to save the strategic investment fund from collapsing. Malaysian Reserve’s P Prem Kumar reports:

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Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah said the government still believes a restructuring is possible, despite the sizeable debt of RM42 billion.

He admitted the government does not want 1MDB to default on its loans to local and foreign banking institutions, as it would have a “systemic effect” on the country.

“I am completing the restructuring report, then I will table it to Cabinet next week. Maybe after that, we can announce the next step,” the minister told reporters at the Parliament lobby yesterday.

He said the restructuring exercise would involve the company’s energy and property assets and the process had been discussed with 1MDB president Arul Kanda Kandasamy and the board of 1MDB.

“We have had discussions, I have called him. So the approach is very clear. Whenever we want to do a restructuring, firstly we have to know what is the clear position. Now, their position is very clear.

“The next step would be to know how to go ahead. We now have our plans, it’s very concrete,” Ahmad Husni said.

He also assured that 1MDB is only facing a “short-term cashflow problem” which the government would like to settle.

“In terms of asset quality, they have the assets to pay all debts. It’s only a short term cashflow problem,” he stressed.

Ahmad Husni admitted the US$1.103 billion (RM3.97 billion) redeemed from 1MDB’s Cayman Islands account had been mistakenly described as “cash” instead of just “assets” by Arul Kanda before.

The minister confirmed his ministry’s clarification earlier this week that the redemption, now parked in Singapore’s BSI Bank Ltd, is in the form of “units” and not US dollars as previously claimed.

“There was a mistake, in the sense that it was the impression (given by 1MDB) when they said they had redeemed (the funds) and saved in the Singapore bank.

“It was an impression there is cash, but actually it is a saving. The redemption is units, that is being backed by sovereign wealth funds,” he said. However, the minister declined to divulge further information on what “units” meant.

Source:  http://themalaysianreserve.com/new/story/1mdb-shakeup-proposal-%E2%80%98will-be-tabled-cabinet%E2%80%99