1MDB, IPIC settlement deal gets consent award

KUALA LUMPUR: 1Malaysia Development Bhd (1MDB) and Abu Dhabi’s International Petroleum Investment Company (IPIC) have received a consent award from the London International Arbitration Court over their settlement involving US$3.5 billion (RM15. 2 billion) bonds.

The consent award, in the context of Malaysian law, is akin to the international arbitration court acknowledging that the disputing parties are opting for an out-of-court settlement.

IPIC, in a filing with the London Stock Exchange yesterday, revealed that the consent award was granted on Tuesday.

The consent was significant as it allowed the proposed settlement between 1MDB and IPIC to move ahead as it was previously under the condition that a consent award must be granted.

“Following the announcement on April 24, 2017, of the conditional settlement reached between International Petroleum Investment Company PJSC, Aabar Investments PJS, the Minister of Finance (Incorporated) Malaysia and 1Malaysia Development Bhd, a consent award was made on May 9, 2017.

“Accordingly, the settlement in respect of the arbitration proceedings at the London Court of International Arbitration is now unconditional,” IPIC said in a brief statement.

IPIC had, on April 24, said 1MDB and MOF Inc had agreed to pay US$1.2 billion, as well as assume responsibility for US$4.8 billion in principal and interests for two bonds that were previously guaranteed by IPIC.

Under the settlement, 1MDB and IPIC would enter into good faith discussions about funds 1MDB had paid to certain entities.

The arbitration came about due to a dispute between 1MDB and IPIC on the two United States dollar bonds that were issued in 2012.

The bonds were raised by 1MDB when it acquired two power plants and were guaranteed by IPIC.

Subsequently, 1MDB ran into financial constraints and embarked on a restructuring exercise.