KUALA LUMPUR, Nov 29, 2015:

The following is a media statement by 1Malaysia Development Berhad (1MDB) regarding the sale of Edra in response to allegations by former Prime Minister Tun Dr Mahathir Mohamad:

1MDB refers to a blog post relating to the sale of Edra Dr Mahathir, a retired and former politician, who has failed in his numerous attempts to politicise the 1MDB issue.

We regret that Dr Mahathir persists in issuing misleading and wrong statements on 1MDB, which is then reported in an irresponsible manner, without analysis or journalistic enquiry, by certain online media portals.

Through the sale of Edra to CGN Group, based on Edra’s March 31 financial statements, 1MDB will receive for its equity, cash of RM9.83 billion. In addition, CGN Group will take over debt in the Edra operating assets of RM7.43 billion.

Accordingly, through cash receipts and debt transfer, 1MDB will achieve debt reduction of up to RM17 billion, which is well within the anticipated RM16 billion to RM18 billion range per the rationalisation plan. Arul Kanda, the president and group executive director of 1MDB, has clearly explained these facts, which were reported in the media last week.

It is important to clarify that the up to RM17 billion debt reduction is over and above the RM2 billion cash dividends that 1MDB has received over time from the power assets during its ownership.

Accordingly, 1MDB has essentially “broke even” on its investment, through an international tender process, despite having to sell its assets while under sustained and misleading attacks from the opposition and Dr Mahathir himself.

If Dr Mahathir took the trouble to review Note 29 (v) of 1MDB’s March 31, 2014 publicly available audited financial statements, he would realise that of the RM42 billion 1MDB debt, RM19.82 billion of debt is denominated in the ringgit and RM22 billion is denominated in US dollars. Accordingly there is more than enough ringgit denominated debt to be settled from the RM9.83 billion Edra sale cash proceeds.

As for the US dollar debt which so concerns Dr Mahathir, per the binding term sheet executed with IPIC on May 28, 2015, it is the intention of 1MDB that US$3.5 billion of IPIC guaranteed bonds will be settled via a “debt-for-asset swap” with IPIC.

This envisages 1MDB transferring to IPIC, 1MDB assets comprising US dollar denominated cash deposits and US dollar denominated fund units, in return for IPIC taking over the US$3.5 billion of bonds that it has guaranteed.

Dr Mahathir has also misled his blog readers by failing to mention that the IPP tariff for the Edra assets are fixed for the life of the PPA (power purchase agreement) period. On average across all the Edra power plants, this is for the next 10 years. So, there is no question of the IPP tariff being increased for the life of the PPA, despite the change of ownership.

Dr Mahathir has repeatedly misled the public with false statements. Most infamously, he is on the record as saying “RM42 billion hilang” (“RM42 billion missing”) from 1MDB.

The sale of the Edra operating assets, with a debt reduction of up to RM17 billion, clearly shows how Dr Mahathir was and continues to be, wrong. Secondly, Dr Mahathir has repeatedly insinuated that RM2.6 billion in the accounts of Prime Minister Datuk Seri Najib Razak was from 1MDB. This is despite the MACC publicly issuing three statements that no funds from 1MDB went into the accounts of Najib.

1MDB requests that Dr Mahathir uses facts and figures in his arguments and to stop his misleading and wrong political attacks on 1MDB. We further urge the online news media to also properly analyse and use critical analysis prior to publishing such wrong and misleading statements by this retired, former politician.

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