1MDB has paid up the first tranche of payment it owed to the International Petroleum Investment Company (IPIC) as part of a settlement agreement.

"IPIC has now received the funds required to be paid by Aug 31 to complete the performance by Minister of Finance (Incorporated) Malaysia and 1MDB of the payment obligations that were initially due to be performed by July 31 under the settlement and the consent award and to pay default interest on the delayed payment," IPIC said in an announcement to the London Stock Exchange. 

IPIC did not state the total amount it received but according to an earlier announcement on Aug 1, it had expected a total of US$602,725,000 on top of another US$26,024,509.59 in interest payment.

1MDB was supposed to have paid up the amount by July 31 but had sought an extension, citing late arrival of its funds due to regulatory approval issues.

IPIC in an announcement on Aug 8 granted 1MDB the extension subject to 1MDB paying US$310 million by Aug 12 and the remaining sum by Aug 31. 1MDB was also required to pay additional interest for the delays.

1MDB paid up the first part on Aug 11 and the remaining sum today.

1MDB will need to pay another tranche of US$602,725,000 as well as an undisclosed amount of interest by Dec 31 as part of the settlement.

Apart from the payments, as part of the settlement, 1MDB also agreed to assume the payment of interest and principal for two bonds totalling US$3.5 billion which IPIC had previously guaranteed.

1MDB is also engaging IPIC in "good faith discussions" with regard to payments 1MDB claimed it made to IPIC's subsidiary Aabar Investments PJS but IPIC denied ever receiving.

Meanwhile, 1MDB in a statement confirmed it had settled the payments initially due on July 31 and then extended to Aug 31.

"All funds were paid from proceeds of the ongoing rationalisation programme," it said.