1MDB says deal with IPIC will reduce debt by RM16 billion

PETALING JAYA: 1Malaysia Development Bhd (1MDB) has confirmed that it will hand over its US dollar-denominated cash deposits and part of its US dollar funds under management, either in cash or units, in exchange for International Petroleum Investment Co (IPIC) taking over US$3.5 billion bond principal and interest obligation.
The state-owned strategic development company said the transaction will reduce its debt by about RM16 billion.
The statement issued on Friday, which 1MDB said was in response to IPIC’s announcement of the progress of the deal between the two, came just an hour after Bank Negara Malaysia (BNM) said it has revoked permissions given to 1MDB for US$1.83 billion in investments made overseas. This was due to inaccurate and incomplete information provided in the application for approval.
As part of the decision, 1MDB was ordered to bring the money back to Malaysia.
Although BNM did not specify which transaction the US$1.83 billion was for, the amount is believed to be the funds 1MDB invested in PetroSaudi International between 2009 and 2011.
1MDB said in the statement the transaction will see IPIC assume obligation for a US$3.5 billion bond principal and interest, currently held by 1MDB, which follows a US$1 billion cash payment made by IPIC to 1MDB in June 2015.
“IPIC’s assumption of these obligations will be satisfied through an exchange of assets, provided by 1MDB, partly the company’s US$ denominated cash deposits and partly its US dollar funds under management – either in cash or in fund units – upon mutual agreement with IPIC,” 1MDB said.