1MDB: Debt now at RM30bn, backed by RM43bn assets

Begun by 1MDB, the Bandar Malaysia scheme has been taken over by Minister of Finance Incorporated.

PETALING JAYA: 1Malaysia Development Bhd’s debt currently stands at US$7.75 billion (about RM30.2 billion at current exchange rates) backed by US$11 billion (almost RM43 billion) in assets, says the company’s chief executive.

Arul Kanda Kandasamy, who is president of the government-owned investment fund, told CNBC, the US-based business television channel, that there had never been any concern over the state of 1MDB’s finances.

“I’m very proud to say that 1MDB has not defaulted on any of its payment obligations. We continue to service the debt,” he said.

The company, wholly-owned by the Minister of Finance Inc, was the subject of intense public scrutiny over the past six years with fears about debts of RM45 billion and its ability to meet its loan obligations.

The company’s debt currently stood at US$7.75 billion (about RM30.2 billion at current exchange rates) but it had nearly US$11 billion (almost RM43 billion) in assets.

Arul said the company’s rationalisation plan in 2015 had helped boost its standing among international investors.

The company was reorganised after a parliamentary inquiry was conducted into its affairs. Its land and property assets were taken over by the Minister of Finance Inc, including the Bandar Malaysia property development and the Tun Razak Exchange financial centre in Kuala Lumpur.

The company is no longer an operating company and exists mainly to carry out a rationalisation plan and service its debt obligations.

Arul said the rationalisation plan, begun in 2015, was “to monetise assets over time” and meet the company’s debt obligations.

“That move boosted confidence among international investors, who are now satisfied with the transparency and openness of the company and have now committed to invest in projects that were originated by 1MDB,” he told CNBC.

He added that the company’s last bond matures in 2039, but that the debt could be paid earlier, depending on the pace and speed of asset development.

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