1MDB: We broke even on investments in Edra

PETALING JAYA: 1Malaysia Development Bhd (1MDB) said it has broken even on its investments in Edra Energy Global after it was sold to China General Nuclear Power Corporation (CGN).
The sovereign fund said it will receive RM9.83 billion from the deal while CGN will take on Edra’s RM7.43 billion debt.
“Accordingly through cash receipts and debt transfer, 1MDB will achieve debt reduction of up to RM17 billion, which is well within the anticipated RM16 billion to RM18 billion range per the rationalisation plan.
“Accordingly, 1MDB has essentially ‘broke even’ on its investment through an international tender process,” the state investment arm said in a statement yesterday.
In addition, the company said, it was also paid RM2 billion in dividends when it owned Edra.
1MDB purchased Edra for RM12 billion three years ago, a price that critics have said is grossly inflated, and inherited about RM6 billion in debt.
Former prime minister Tun Dr Mahathir Mohamad, an open critic of 1MDB and Prime Minister Datuk Seri Najib Abdul Razak by extension, on Saturday raised more questions about 1MDB’s RM42 billion debt.
Mahathir pointed out that if the loans were borrowed in US dollars, the drastically decreased value of the ringgit, from RM3.20 per US dollar from the time of Edra’s purchase to RM4.20 at the time of its sale, would mean 1MDB is losing an additional RM1 per US dollar.
1MDB rebutted by saying only RM22 billion of its debt is denominated in the greenback while the other RM19.82 billion is in ringgit, which is more than enough to be settled with Edra’s RM9.83 billion.
For the US dollar-denominated debt, 1MDB said this will be settled with the debt-for-asset swap with International Petroleum Investment Co (IPIC). The deal will have 1MDB transferring its US dollar cash deposits and fund units in return for IPIC taking over US$3.5 billion in bonds.
1MDB further urged Mahathir and the Opposition to stop misleading the public with false statements and to use facts and figures in their arguments.
Meanwhile, Deputy Finance Minister Datuk Johari Abdul Ghani said the move made by 1MDB was necessary.
“In my opinion, 1MDB had to do this as there was no choice – there was no response in the IPO (initial public offering), and if it wanted to sell (Edra) to local bidders, the price might not be enough. Therefore, it had to be opened to foreign bidders.”
Johari pointed out that after Edra is sold, the debts will be held by the company which purchased it, while the earnings from selling will help pay off the debts incurred by 1MDB.
“If 1MDB cannot pay off its debts, the government has to take over, and the money used will increase our fiscal deficit This is what 1MDB is trying to avoid,” he said this after officiating at the 41st Finance Ministry Sports Carnival yesterday.