Emiratis, Malaysians reach $1.2B deal over troubled fund

25 April, 2017, 12:49 | Author: Evan Mason
  • Men walk past a 1Malaysia Development Berhad billboard at the fund's flagship Tun Razak Exchange development in Kuala Lumpur

The financial dispute between 1Malaysia Development Berhad (1MDB) with Abu Dhabi's International Petroleum Investment Co (IPIC) has been a closely-watched and long-drawn dispute which has been politicised by many in the Opposition.

The settlement is the first major step towards addressing IPIC's claims, which included $3.5 billion in bonds, plus interest amounting to $4.8 billion, a $1.2 billion loan plus interest, and about $481 million owed to IPIC's subsidiary Aabar, a source who asked not to be named told Reuters.

1MDB will also assume the coupon and principal obligations for US$3.5 billion of bonds issued by it and co-guaranteed by IPIC, the statement added.

These include the $1.75 billion 5.75 percent fixed rate notes due 2022 and $1.75 billion fixed rate 5.99 percent notes due 2022, both issued by 1MDB entities.

"These obligations will be met by 1MDB, primarily via monetisation of 1MDB-owned investment fund units", the Malaysian fund said in a separate statement quoted by Bloomberg News.

The settlement agreement between 1MDB and IPIC is conditional on the Arbitration Tribunal making a consent award by May 31, 2017, the IPIC statement read.

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In the UAE, the former head of IPIC, Khadem al-Qubaisi, is named in a series of court documents filed by US federal prosecutors as receiving money from the 1MDB scam and buying luxury properties. In return, 1MDB had agreed to transfer assets - both cash and fund units - to IPIC as collateral. However, last April, IPIC said 1MDB and MoF Inc were "in default".

KUALA LUMPUR/ABU DHABI Malaysia moved closer to clearing up the financial fallout of its 1MDB scandal on Monday by resolving a debt dispute with Abu Dhabi, bolstering Prime Minister Najib Razak ahead of elections.

1MDB said the arbitration settlement and monetisation of investment fund units represents the resolution of a significant challenge facing the troubled fund.

1MDB, which in July 2016 said its audited financial statements for 2013 and 2014 should not be relied upon after United States prosecutors said more than US$3.5 billion was misappropriated from the fund, has not reissued audited accounts for financial years 2013 and 2014.

A spokesman for the Malaysian government said he is pleased that 1MDB and IPIC have resolved the dispute in an "amicable manner", noting that 1MDB is in the midst of completing a "rationalization program".

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