Media statement by 1Malaysia Development Bhd (1MDB) Update on Rationalisation Plan
To address the clearly documented challenges facing the company, 1MDB commenced a strategic review in January 2015, the outcome of which was announced on Feb 18, 2015.
The strategic review recognised a need to consolidate activities of the company, enhance corporate governance and monetise assets to reduce debt.
An immediate outcome of the strategic review was the execution of a joint venture in March 2015 with Lend Lease of Australia to develop 17 out of 70 acres of land in the Tun Razak Exchange (TRX).
Notwithstanding this early success and the fact that 1MDB is owned 100% by the Government of Malaysia, we became the subject of a sustained and unsubstantiated politically motivated campaign by certain opposition politicians and Tun Mahathir Mohamad, who were in turn supported by certain print and online media outlets.
These parties not only cast aspersions on 1MDB but used various means to sabotage its day-to-day business, which impacted, amongst others, a proposed IPO of Edra Global Energy.
Various baseless allegations were made e.g. that “RM 42 billion was missing” and that “RM16 billion of assets were worthless” as well as allegations that 1MDB had conspired to channel funds to third parties.
Nonetheless, 1MDB and its 100 per cent shareholder, the Government of Malaysia, are currently in the process of implementing a rationalisation plan, which was presented to Cabinet on May 29, 2015.
Since then, 1MDB has taken a number of concrete steps to reduce the company’s debt and ensure that maximum value is generated.
Specifically, we completed the repayment of a USD975 million loan (approx. RM3.6 billion) on June 8, 2015. This was on the back of a binding term sheet agreement with IPIC that will ultimately result in a reduction of approximately RM16 billion of 1MDB’s debt.
On June 30, 2015, we announced our intention to appoint an independent real estate consultant to help review expressions of interest received for the company’s land parcels in Air Itam and Pulau Indah.
Separately, as announced by our independent real estate consultant C H Williams Talhar and Wong, we have received expressions of interest from over 40 local and international parties to be development partners for our 486-acre Bandar Malaysia project.
In addition, we announced on July 16, 2015, that 1MDB had received indicative, non-binding offers from a number of local and international parties in relation to the monetisation process of our investment in Edra Global Energy Berhad.
Collectively, these tangible actions by 1MDB will significantly reduce debt and ensure the long term sustainability of our three core assets, namely TRX, Bandar Malaysia and Edra Global Energy.
As reflected by the number of initiatives that are currently underway, 1MDB is focused on and making good progress with the implementation of our rationalisation plan.
Concurrently, the company is fully cooperating with and providing information to the lawful authorities who are carrying out investigations in a professional and thorough manner.