This article first appeared in The Edge Financial Daily on August 9, 2017

KUALA LUMPUR: The International Petroleum Investment Co (IPIC) has given 1Malaysia Development Bhd (1MDB) another extension until the end of August to make its debt repayment of US$628.75 million (RM2.69 billion) — amount includes principal and interest of US$26.025 million — provided it makes a partial payment by Saturday.

IPIC yesterday said 1MDB and its guarrantor, Minister of Finance Inc (MoF Inc), have until Aug 31 to “complete the performance of the payment obligations” that were due on July 31 (with a five-business-day grace period subsequently given until yesterday). Additionally, 1MDB must also pay “default interests on the delayed payment”.

“This extension is subject to MoF Inc and 1MDB making payment of not less than US$310 million of the full amount due on or before Aug 12, 2017,” the Abu Dhabi sovereign wealth fund added in a filing with the London Stock Exchange.

The new extension was also mentioned earlier in the day by Treasury secretary-general Tan Sri Dr Mohd Irwan Serigar Abdullah, who is also 1MDB chairman.

Bernama reported Mohd Irwan as saying that the delay in payment was due to the time taken by 1MDB to sell its assets and to comply with some regulatory requirements, which took longer than expected.

“It is the selling of the units and there are some regulatory requirements and so on,” Mohd Irwan said. “We need to comply with all these. It will take time which we did not foresee. So all these things will be settled.”

The payment due currently is the first tranche of the US$1.2 billion which 1MDB must pay IPIC, after the Abu Dhabi fund assisted 1MDB to meet the obligations of its US$3.5 billion bond issuance, where IPIC is a co-guarantor.

The second tranche — worth US$602.73 million — is due to IPIC by year end.

On Aug 1, 1MDB said that all the payment due to IPIC will come from its rationalisation plan.

The Edge Financial Daily reported that this will come mainly from the monetisation of its fund units held under Brazen Sky (reportedly US$940 million) and 1MDB Global Investment Ltd (estimated US$1.5 billion).

When the Malaysian strategic investment fund missed the July 31 deadline, it cited “additional regulatory approvals” needed to get to the proceeds of its rationalisation plan as the reason, saying it had expected to receive the proceeds by July.

IPIC then gave a cure period of five working days for both 1MDB and MoF Inc to make repayment, before the two parties become subject to additional obligations to IPIC and Aabar Investments PJS.

On Aug 2, Prime Minister Datuk Seri Najib Razak said in parliament that 1MDB’s delayed payment was not because of a lack of funding. Meanwhile, Second Finance Minister Datuk Seri Johari Abdul Ghani reportedly said that 1MDB had not asked the MoF or the government for help on the issue thus far.