Scandal-ridden sovereign investment fund 1Malaysia Development Berhad (1MDB) has pared down its debts considerablyby selling a 60% stake in its Bandar Malaysia project to a consortium consisting of Johor’s Iskandar Waterfront Holdings Sdn Bhd (IWH) and the China Railway Engineering Corporation (M) Sdn Bhd for RM7.41 billion.
In a statement released today, 1MDB said the sale was part of the Finance Ministry-owned company’s rationalisation plan, aimed at paring down its RM45 billion debt.
The purchase price was based on the IWH-CREC consortium’s valuation of Bandar Malaysia Sdn Bhd at RM12.35 billion, significantly higher than 1MDB’s own assessment of RM11.5 billion.
“The winning consortium together with the existing shareholders will resume the remainder of the commitments in Bandar Malaysia, which include the relocation of Pengkalan Udara Kuala Lumpur, a project that costs RM2.7 billion in its entirety,” 1MDB president and group CEO Arul Kanda Kandasamy said today, as quoted by The Malaysian Insider‘s Anisah Shukry.
“The RM2.4 billion sukuk will also be assumed by the project development company.”
The deal will see 1MDB receiving a 10% deposit, or RM741 million, upon the execution of the share sale and purchase agreement, with the entire transaction expected to be completed by June 2016.
The 60% stake in Bandar Malaysia to be held by IWH-CREC will result in a 76% overall stake in the project owned by Malaysian interests, with China’s CREC holding 24%. The new ownership dynamic will also result in 54% of Bandar Malaysia being held by federal or state government interests, and 46% private sector.
Yesterday, 1MDB was once again hit by a report published by The Wall Street Journal, entitled 1MDB and the Money Network of Malaysian Politics which landed on the financial paper’s front page.
The report reiterates most of what the WSJ has already reported on the Najib administration’s alleged acts of corruption, particularly in regards to sovereign investment fund 1Malaysia Development Berhad (1MDB) and the still-mysterious RM2.6 billion money transfer made to Prime Minister Najib Razak’s personal bank accounts in 2013, two months before the 13th General Elections.
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