"The Malaysian Insider somehow chose to twist some of the words in their reporting dated 17 April. May Allah SWT guide us all to do the right things." - Abdul Wahid Omar, Minister in the Prime Minister's Department
Taken from the Unspinners' Insider spin AWO's simple explanation on 1MDB, 18/4/2015
MALAYSIAN INSIDER TWISTING THE FACT AGAIN
The following is the transcript of AWO's answer to a question on 1MDB during a dialogue at Akademi Kepimpinan Kapten Hussein on 16 April 2015.
|Latest victim of TMI's sincere misreporting
"1MDB is a wholly-owned subsidiary of MOF Incorporated, so meaning that it is wholly-owned by the Government. It was set up as a strategic investment company with a paid-up capital of RM1 million.
So their model was to raise long term bonds and aided by Government guarantee that helped to lower the cost of funds.
And hopefully with that money, can be invested into projects that will generate high returns. So that was actually the so called the capital structure or the model how 1MDB started.
So over the years, they have expanded by way of borrowing from the banks or borrowing from the capital markets. And they have been buying many assets including some of the power IPPs and it has gone to the level where the debt level had hit RM42 billion as of 31 March 2014.
And if you can imagine the burden of servicing such a high debt is actually quite, is very high, is very difficult. So until and unless your assets are able to generate that cashflow, it is not sustainable.
So that is something that the Board and Management of 1MDB had realised. And therefore they have undertaken a strategic review of their business model and of their capital structure and they have decided on three things among others.
Number one, they have decided not incur any new debts, any new borrowings unless it is to meet the current debt obligations or to refinance their current debt obligations. So that's number one.
Number two, they have agreed not to embark on any new projects or any new venture and focus their effort on executing the two big projects that they have which is Tun Razak Exchange and Bandar Malaysia. So these are highly valuable projects that needed to focus on.
And the third thing that they have to do is to work as much as possible to get the IPO of Edra Energy going.
So this IPO or the listing of Edra Energy, Edra Energy is the holding company for their IPP assets they are hoping to get listed.
And they will benefit in two ways. So from the IPO, they will get proceeds that can be used to reduce their debts plus if they were to reduce their shareholding to below 50%, so they are then able to de-consolidate all the debts at subsidiary level.
So that will help to reduce the overall gearing of the company. So that's the strategic review undertaken by the Management and Board of 1MDB." .