KUALA LUMPUR (March 4): 1Malaysia Development Bhd (1MDB) is converting the RM2 billion advance granted to its subsidiary Powertek Investments Holdings Sdn Bhd, into equity stake in the latter.
 
Subsequently, Edra Global Energy Bhd, which intends to float its shares on Bursa Malaysia, will resubmit its documentation, previously-submitted to the Securities Commission (SC), in relation to the proposed listing.

Powertek is an operating subsidiary of Edra.

In a statement today, 1MDB president and group executive director Arul Kanda Kandasamy said the conversion of the debt into equity stake in Powertek is among “certain material developments that have occurred in relation to Edra (formerly known as 1MDB Energy Group Bhd)".
 
The statement said Edra has notified the SC its intention to revise, update and re-submit the documentation.
 
The conversion of the advance owed to 1MDB into equity stake, would in turn expand Powertek’s share capital. Consequently, this would help to safeguard 1MDB’s majority holder position in Powertek, should there be any capital injection by third party.
 
Coincidentally, in January, 1MDB needed to pay RM2 billion to local banks, including Malayan Banking Bhd and RHB Bank Bhd, for debt settlement; and the payment deadline had been extended several times.
 
Businessman T Ananda Krishnan (AK) had been said to have lent a helping hand to 1MDB, on settling the outstanding RM2 billion.
 
However, AK’s assistance to 1MDB could pose a problem, as the amount he injected in Powertek would make him the single largest controlling shareholder in the subsidiary, based on its current valuation — a scenario that would breach the bond convenant. 1MDB has to hold a controlling stake in Powertek, under the bond agreement.