Deal with IPIC will shave off RM16 billion debt, says 1MDB

The deal where International Petroleum Investment Company (IPIC) will pay the interests due in October and November this year for a US$3.5 billion bond held by 1Malaysia Development Berhad (1MDB) will reduce the state investor's debt by about RM16 billion, it said in a statement today. http://www.themalaysianinsider.com/malaysia/article/ipic-to-pay-us102-million-interest-for-2-1mdb-bonds “IPIC’s assumption of the bond's principal and interest will be satisfied through an exchange of assets provided by 1MDB, which is partly the company’s US dollar cash deposits and partly its funds under management – either in cash or in fund units – upon mutual agreement with IPIC. “The transaction will, upon completion, result in a reduction of up to approximately RM16 billion from 1MDB's debt levels. “This demonstrates the success of 1MDB’s rationalisation plan, which is also reflected by the strong domestic and international investor interest in Edra Energy and Bandar Malaysia, symbolising the value 1MDB has built up in these assets over time," it said in the statement. The state investor also said that the announcement by IPIC confirming its commitment to work with 1MDB and its full shareholder, the Finance Ministry, had put to rest false claims and allegations concerning the relationship the two companies had in the past. It was reported that IPIC would pay the interests due in October and November this year in respect of the two US$1.75 billion bonds issued by 1MDB Energy Ltd and 1MDB Energy (Langat) Ltd and co-guaranteed by IPIC. This was pursuant to the binding term sheet and as previously disclosed to the London Stock Exchange, said IPIC in an update on the agreement between the firm, Aabar Investments PJS, 1MDB and the Malaysian Finance Ministry on May 28 this year. On June 4, IPIC provided US$1 billion to 1MDB for 1MDB to immediately settle certain of its liabilities (the cash payment) and from June 5, IPIC has assumed 1MDB’s obligations to pay (on an interim basis) all interest due under the notes amounting to US$3.5 billion in aggregate principal amount. IPIC will directly assume liability for all payment obligations under the notes (the assumption of debt) and forgive certain financial obligations of the 1MDB Group to the IPIC group (debt forgiveness). By June 30, 2016, IPIC is to have received a transfer of assets with an aggregate value of an amount, which represents the sum of the cash payment, the assumption of debt and the debt forgiveness. – October 9, 2015.