KUALA LUMPUR (Feb 13): Malaysia's debt-heavy strategic investor 1Malaysia Development Bhd (1MDB) settled a RM2 billion loan yesterday with money from billionaire T. Ananda Krishnan, six days before bankers triggered a default, say sources.
The Malaysian Insider understands from bankers familiar with the matter that the banks involved received the money yesterday evening, hours after Ananda was said to have agreed to the bailout.
The payment is 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.
"The money has come in. It was an Ananda bailout," said a source familiar with the matter.
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.
Among its harshest critics are former prime minister Tun Dr Mahathir Mohamad and former finance minister Tun Daim Zainuddin, apart from opposition lawmakers who say its debts are a risk to the country's financial system.
The opposition had queried 1MDB's financial health after 1MDB president and group executive director Arul Kanda Kandasamy told Singapore's Business Times over the weekend that the remaining US$1.103 billion (RM3.91 billion) Cayman Islands funds will not be repatriated back to Malaysia.