KUALA LUMPUR: News that 1Malaysia Development Bhd (1MDB) has sought and obtained a second six-month extension to repay a US$1.9 billion (RM6.1 billion) loan has once again put the spotlight on what is happening at the controversial state-owned company.

Reuters news agency, quoting unnamed sources, reported yesterday that 1MDB had to seek an extension to pay the bridging loan provided by Maybank Investment Bhd because of a delay in its plan to list its power assets which was supposed to raise US$2 billion.

Reuters reported that the initial public offering (IPO), which aims to raise as much as US$2 billion and is seen as critical to reducing the fund’s debt load, is now expected in the second half of the year.

“Bankers had initially said the IPO could come by mid-year, but it has been pushed back due to delays related to a tender to build a coal-fired power plant that it ultimately won, as well as delays in publishing its accounts after a change in auditors,” the Reuters report said.

The Edge understands that another reason for the delay in the IPO is that 1MDB may not be able to get the valuation it wants for the power plants it bought last year.

Some analysts have said 1MDB had overpaid by as much as RM2 billion for the power plants. 1MDB had paid over RM10 billion to buy power plants from Tanjong Plc and Genting Bhd as well as overseas.

The US$1.9 billion loan owed to Maybank is now payable in November. It is not clear if Maybank will impose a penalty on 1MDB.

The Reuters report also said that 1MDB has been dogged by negative publicity over massive fees and charges it paid for bond sales through Goldman Sachs, a near one-year delay in publishing its 2012-13 accounts and, most recently, changing auditors for the second time since 2009, with Deloitte replacing KPMG.

Up till March 31, 2013 1MDB had borrowings of RM36.2 billion and total liabilities of RM42 billion.

The company has also been criticised for parking around RM18 billion overseas to be managed by small and little-known fund managers, and the lack of transparency on where and what exactly the money has been invested in.

Last year, 1MDB also acquired land assets in Penang for around RM1.38 billion at prices that were double what the land were valued at in 2012.

This article first appeared in The Edge Financial Daily, on May 22, 2014.