1MDB settles remaining sum owed to IPIC due Aug 31

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KUALA LUMPUR (Aug 30): 1Malaysia Development Bhd (1MDB) has settled the remaining sum it should pay International Petroleum Investment Co PJSC (IPIC) by Aug 31 — ahead of the deadline.

In a filing with London Stock Exchange, the Abu Dhabi-based IPIC said "it has now received the funds required", marking the completion of the first part of the payment obligation totalling US$1.21 billion, as part of its debt settlement agreement.

The announcement does not reveal the sum of money 1MDB paid.

The original sum due on July 31 was US$602 million. However, IPIC had earlier warned of possible fine or compensation if the payment obligation was not met within five days after July 31.

In a statement issued this evening, 1MDB said it has remitted to IPIC in full the second tranche due on Aug 31. Similarly, the sum actually paid was not disclosed.

"All funds were paid from proceeds of the on-going rationalisation programme," said 1MDB.

The spotlight was again on the controversial investment fund when 1MDB defaulted on its July 31 payment. The failure to meet its payment obligations had raised concern whether the government needed to step in to pay the amount due on behalf of 1MDB.

1MDB agreed to pay the US$1.2 billion under a settlement agreement that both IPIC and 1MDB had reached in April.

Under the deal, 1MDB agreed to pay back US$1.2 billion to IPIC for a US$1 billion loan plus US$200 million interest payment that IPIC, which is the guarantor of some US$3.5 billion worth of bonds issued by 1MDB, made on behalf of 1MDB in 2015.

The amount is supposed to be paid in two instalments, on July 31 and Dec 31.

Following the July 31 default, IPIC granted 1MDB a one-month extension until Aug 31 to pay the said amount.

This was on the condition that 1MDB collectively pay not less than US$310 million by Aug 12, with the remaining balance to be paid by Aug 31. 1MDB previously announced on Aug 11 it had paid US$350 million to IPIC, ahead of the deadline.

Now, 1MDB has four months to raise funds to pay the remainder US$602.73 million before the year ends.