Dubai white knight gallops to 1MDB's rescue

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UAE's International Petroleum Investment Company (IPIC) will pay 1MDB's US$975 million (RM3.57 billion) debt to an international banking consortium which is demanding payment four months ahead of schedule.

This was announced by Second Finance Minister Ahmad Husni Hanadzlah, who submitted a proposal to cabinet today on the restructuring plan for 1MDB.

"I am pleased to announce that 1MDB has entered into a binding agreement with the IPIC and its subsidiary Aabar Investments PJS (Aabar).

"As part of this agreement, IPIC will make a payment of US$1 billion, on or before June 4, 2015.

"This US$1 billion payment will be used to repay a US$975 million loan, in advance of its due date, to a syndicate of international bank lenders.

"The agreement will also include further measures to comprehensively address the various financial asset and liability transactions between the parties, further details of which will be announced in due course," he said in a statement today.

According to a Bernama report, the deal with IPIC and its unit, Aabar, will see 1MDB's debt reduce by approximately RM3.5 billion in less than a week.

Additional transactions - the details of which will be finalised in the coming weeks - will further reduce 1MDB’s debt by between RM12.0 billion and RM12.5 billion, the report said.

The national news agency said in exchange, 1MDB will provide IPIC and Aabar with a number of financial assets, including "units" that are held in the company’s BSI Singapore account.

IPIC, formed in 1984, is owned by the Abu Dhabi government while Aabar Investment has known investments with 1MDB.

Aabar Investment has a 49 percent stake in Powertek Holdings and a 20 percent stake in RHB Capital Bhd.

Aabar Investment CEO Mohamed Ahmed Badawy Al-Husseiny ( photo ) is a known associate of Riza Aziz, step-son of Prime Minister Najib Abdul Razak.

Mohamed Ahmed Badawy was among the funders of Riza's Hollywood film, The Wolf of Wall Street .

On May 13, Singapore's Business Times reported that a consortium of six international banks led by Deutsche Bank has demanded that 1MDB repay the loan ahead of its September deadline.

Jittery banks

The magazine reported that the banks were jittery over 1MDB's ability to repay its loans.

According to the report, the banks had initially granted the loan after 1MDB offered US$1.103 billion as collateral through its Brazen Sky Limited account in BSI Singapore.

The collateral was part of 1MDB funds previously deposited in the Cayman Islands, said the report.

However, there is now uncertainty over what exactly is in Brazen Sky's account. Putrajaya has refused to provide exact details, even to Parliament .

Bank Negara has been notified of some irregularities regarding the account by the Monetary Authority of Singapore (MAS).



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