This article first appeared in The Edge Financial Daily, on May 18, 2016.

KUALA LUMPUR: Edra Global Energy Bhd’s purchase of a 75% stake in Jimah Energy Ventures Sdn Bhd in January 2014 was the main cause of the power producer’s net loss multiplied by 7.88 times to RM475.07 million in the financial year ended March 31, 2015 (FY15) from the previous year, as its interests paid rose by 37.4% to RM1.07 billion and its plant’s depreciation charge went up by 56.2% to RM460.33 million.

Edra, a former wholly-owned subsidiary of 1Malaysia Development Bhd (1MDB) that was sold to China General Nuclear Power Corp last November, also incurred RM250 million in impairment losses on goodwill, its FY15 financial statement showed.

Although Edra’s finance costs ballooned in FY15, total borrowings recognised in its books fell by RM3.89 billion or 25.28% to RM11.49 billion. This was mainly due to 1MDB advancing to Edra the RM2 billion payment of Powertek Investment Holdings Sdn Bhd’s syndicated bridging loan.

Hence, the amount that Edra was due to pay to its ultimate holding company 1MDB rose to RM2.85 billion as at March 31, 2015, up from RM690.08 million the year prior.

The RM2 billion payment, which was in the news last year because of Powertek’s trouble in reimbursing the syndicate of banks it borrowed from, was the second tranche of a RM6.17 billion syndicated bridging loan taken in 2012 that was refinanced via a term loan facility.

Powertek paid RM670 million of the syndicated bridging loan in FY15, while the remaining RM3.5 billion tranche was broken down into 20 semi-annual instalments of RM175 million each.

In April this year, 1MDB announced that all the RM3.5 billion amount was paid off as part of its rationalisation plan. The RM2 billion loan was settled a few weeks later with T Ananda Krishnan’s Tanjong plc, which subscribed to a RM2 billion share option agreement, where the latter could either convert the 214.29 million Edra warrants it received, or redeem them for cash.

Edra’s finance costs spiked in FY15 because of interest charges on Jimah’s Istisna medium-term notes and junior Islamic debt. Edra bought Jimah in January 2014, so the interests had multiplied year-on-year since the amount paid in FY14 took into account only three months’ worth of payments.

In FY15, finance cost of the Istisma medium-term notes came to RM209.29 million, nearly threefold the RM72.44 million Edra paid a year earlier. The debt paper had a principal value of RM3.55 billion, and carried profit rates between 7.7% and 9.85% a year, which were repayable over 18 months to 16.5 years from the drawdown date.

The junior Islamic debt’s finance cost, meanwhile, jumped to RM242.56 million from RM58.58 million in the previous year.

In total, Edra paid RM2.69 billion for financing activities,155.62% higher than FY14’s RM1.05 billion, but it could have been more had 1MDB not advanced more than RM2 billion for the syndicated loan.

Consequently, its cash pile shrank by 22.03% to RM2.52 billion in one year; its bank deposits were lessened by nearly RM900 million to RM1.97 billion.

Edra’s non-current asset value went down by 5.55% to RM18.22 billion. Its property, plant and equipment fell by nearly RM300 million to RM5.61 billion, as its plant and machinery’s depreciation charge was RM460.33 million in FY15. This compared with the segment’s RM294.65 million depreciation charge in FY14.