KUALA LUMPUR (Feb 14): A DAP lawmaker has urged troubled 1Malaysia Development Bhd (1MDB) to disclose the full terms of the amount borrowed from tycoon T Ananda Krishnan, following the announcement that the company had settled the RM2 billion loan with banks.
"It must be asked, what was agreed with Tan Sri Ananda for the RM2 billion loan?
"As much as Malaysians are a kind, generous and forgiving people, no one could possibly imagine any local billionaire giving a multi-billion ringgit loan to a wholly-owned government subsidiary without strings attached," said Petaling Jaya Utara MP, Tony Pua, reacting to the statement yesterday by 1MDB president and group executive director, Arul Kanda.
"Did 1MDB sign a loan agreement with a white knight or the devil? For example, what is the term of the loan, the interest rates and other relevant conditions?" asked Pua.
Arul had said that the loan "was settled in advance of the due date, per the terms of the loan facility agreement".
"With the settlement of this loan, I reaffirm 1MDB’s commitment to continue meeting all our debt obligations as they become due,” said Arul in a statement.
Pua took Arul to task for not mentionong the source of the funds and the fact that 1MDB had been granted three extensions since November 2014.
"This doesn’t take into account the fact that the RM2 billion loan originated from an outstanding RM5.5 billion loan 1MDB couldn’t repay in November 2013, before being restructured into a RM3.5 billion 10-year loan and the existing short-term RM2 billion loan," he said.
He added that the last time 1MDB secured a “generous” guarantee given by International Petroleum Investment Corporation of the Abu Dhabi Government, it had to offer options in their power companies worth at least US$250 million.
Pua (pic, left) said Malaysians have a right to know the agreement with Ananda, as 1MDB is a subsidiary of the Ministry of Finance, and its heavy debts were a cause for public concern.
"After all, 1MDB’s woes are far from over after this temporary reprieve. Out of the RM42 billion debt in 1MDB’s books, another US$975 million (RM3.45 billion) will become due in September.
"This also doesn’t take into account the annual financing cost estimated at RM2.4 billion based on the company’s 2014 financial report," said Pua.
The Malaysian Insider had reported that the banks involved received the money on Thursday evening, hours after Ananda was said to have agreed to the bailout.
The payment was a last-minute reprieve for 1MDB – a cross between a sovereign fund and a private investment firm wholly owned by the Ministry of Finance. Its debt woes were seen as pressuring the ringgit and Malaysia's sovereign credit rating.
Other sources confirmed the repayment of the RM2 billion for tranche 2 of the RM5.5 billion bridging loan to the relevant banks.
The 1MDB subsidiary, Powertek Investment Holdings Sdn Bhd, took the loan last May to refinance a RM6.17 billion bridging loan taken in 2012 to part finance the purchase of power assets.
1MDB restructured the RM5.5 billion bridging loan into two tranches: a RM3.5 billion loan due by August 2024 and a RM2 billion loan due last November, according to data from LPC, a Thomson Reuters unit specialising in loans.
The RM2 billion loan was guaranteed by Ananda's company Usaha Tegas, said people with knowledge of the talks between Ananda and 1MDB.
Malaysia's Maybank has 58.99% of the RM2 billion loan, while RHB has 32.41%. The other lenders are Alliance Investment Bank Bhd (4.06%), Malaysia Building Society Bhd (3.24%) and Hwang DBS Investment Bhd (1.29%).
The development fund, which owns a large portfolio of power plants, has missed payments on the bridge loan that was due end-December and its lenders were keen to see it paid before they had to write it down in first-quarter earnings, bankers said.
The Malaysian Insider had reported that the final deadline for the loan repayment was February 18.
Ananda, who sold his collection of power plants to 1MDB, has been in talks with 1MDB to become a cornerstone investor in the long-delayed US$3 billion listing of its power assets.
1MDB, whose advisory board is chaired by Prime Minister and Finance Minister Datuk Seri Najib Razak, has some RM42 billion in total debt. It has been heavily criticised for taking on the debt and the difficulty in repaying its loans.