Life&Culture

Malaysia's 1MDB reaches settlement deal with Abu Dhabi's IPIC

Malaysia's 1MDB reaches settlement deal with Abu Dhabi's IPIC

Messy and protracted arbitration over the dispute would have brought into the open serious failings in the management of state-owned entities such as 1MDB, Abu Dhabi's International Petroleum Investment Company (IPIC) and its associate concern Aabar Investments, they said.

The two bonds were for $1.75 billion of 5.75% fixed-rate notes due in 2022, issued by 1MDB Energy (Langat) Limited, and another for the same amount of 5.99% fixed-rate notes due the same year, issued by 1MDB Energy Limited.

Last year, IPIC had asked a London court to arbitrate in a dispute with 1MDB, in which IPIC claimed about US$6.5 billion. Among the issues between the two were billions in allegedly missing funds.

However, of greater significance is the fact that 1MDB's concession to the above settlement terms is a direct affirmation and confirmation that 1MDB lost US$3.51 billion worth of payments that have purportedly been paid to IPIC and its subsidiary, Aabar Investments PJS. In return, 1MDB had agreed to transfer assets - both cash and fund units - to IPIC as collateral.

In June 2016, Ipic instituted legal proceedings to recover approximately US$6.5bnn from 1MDB.

The agreement is contingent on the arbitration panel making a consent award on May 31, the filing said.

IPIC claimed that 1MDB was in default of the agreement after the sovereign fund failed to repay the loan. The bonds were raised by 1MDB when it acquired two power plants and were guaranteed by IPIC.

In a statement yesterday, 1MDB said its obligations will be met "primarily via the monetisation of 1MDB-owned investment fund units".

This arbitration settlement and monetisation of investment fund units represents the resolution of a significant challenge, and is a major part of the 1MDB rationalisation plan, which is now at its final stages of conclusion, it said.

1MDB, once a pet project of Malaysian Prime Minister Najib Razak, is the subject of money-laundering investigations in at least six countries.

"These significant events represent the continued positive progress made by 1MDB, which is nearing the completion of its rationalization programme", he said in a statement issued today.

"The latest act of settling the debt dispute just means that the 1MDB issue is settled. and this paves the way for elections", Oh Ei Sun, Senior Fellow at S.Rajaratnam School of International Studies, said.


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