RE­STRUC­TUR­ING PLAN ‘GO­ING WELL’

Is­sue of bail­ing out com­pany is ir­rel­e­vant, says ex-Se­lan­gor MB

New Straits Times - - News - KUALA LUMPUR

FOR­MER Se­lan­gor Men­teri Be­sar Tan Sri Ab­dul Khalid Ibrahim said the is­sue of 1Malaysia De­vel­op­ment Bhd (1MDB) bailout is ir­rel­e­vant, given the firm’s re­struc­tur­ing is pro­gress­ing well.

Khalid, who at­tended Pas’ round­table dis­cus­sion on 1MDB re­cently, said he was con­vinced that the com­pany’s debt re­struc­tur­ing, ini­ti­ated by chief ex­ec­u­tive of­fi­cer Arul Kanda Kan­dasamy and its board mem­bers, was work­ing.

“1MDB op­er­ates on a low or small eq­uity cap­i­tal while re­ly­ing on lever­age fi­nanc­ing to sup­port its in­vest­ment with cap­i­tal gain po­ten­tial in medium term — rid­ing on so­cial and po­lit­i­cal sup­port from the gov­ern­ment to en­hance value and prof­itabil­ity for its projects,” Khalid wrote in Free Malaysia To­day.

“The main chal­lenge faced by the com­pany is its obli­ga­tion to ser­vice the in­ter­est pay­ment while the project is in its ini­tial and de­vel­op­ment stage.”

Khalid noted that it was easy to ap­pre­ci­ate that 1MDB had paid over US$10 bil­lion (RM42.9 bil­lion) in in­ter­est on the back of RM10 mil­lion of eq­uity cap­i­tal and un­til to­day, still man­aged to ser­vice th­ese debts and fi­nan­cial com­mit­ments.

He noted that Arul had briefed on the cur­rent fi­nan­cial po­si­tion and showed the par­tic­i­pants 1MDB’s bal­ance sheet fol­low­ing the re­struc­tur­ing plan.

“In con­clu­sion, the net present value of the as­sets owned by 1MDB was able to ser­vice its cur­rent and fu­ture li­a­bil­i­ties that re­sulted in a sur­plus. To avoid fu­ture com­pli­ca­tions in oper­at­ing the as­sets of 1MDB, th­ese as­sets were to be trans­ferred to MOF Inc as own­ers, as per the re­struc­tur­ing plan. 1MDB is to make the ap­pro­pri­ate pay­ment of the debts as and when the in­come and gains from as­sets trans­ac­tions by MOF Inc flow to 1MDB.

“The re­struc­tur­ing man­age­ment of 1MDB must en­sure for the cur­rent net present value of the as­sets con­tinue to be main­tained so that there will be no dis­rup­tion in ser­vic­ing the debts and com­mit­ment. And, of course, the value of the as­sets of 1MDB should be much more the cur­rent net as­sets value as the trans­ac­tion was em­barked out­side 1MDB — no thanks to the bad po­lit­i­cal pub­lic­ity it has been re­ceiv­ing.”

Khalid said given this sce­nario, the re­struc­tur­ing was in good progress and the is­sue of “bail­ing out 1MDB is ir­rel­e­vant”.

He stressed that in the meeting, Arul stated that no monies or as­sets be­long­ing to the com­pany or its sub­sidiaries was in­volved as in­di­cated by the US At­tor­ney Gen­eral’s ef­forts in se­cur­ing as­sets be­long­ing to Malaysia, dur­ing which 1MDB was said to be in­volved in the al­leged il­le­gal trans­ac­tions.

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