News Coverage

Date: 
05-05-2016
1MDB to become shell company, says Arul
1MDB to become shell company, says Arul
Source: 
New Straits Times

KUALA LUMPUR: 1Malaysia Development Bhd (1MDB) will become a shell company once its rationalisation plan is fully implemented, its president and executive director Arul Kanda reiterated.

The Strategic development company would pay back its debt through future cash flows of four assets that are being handed over to the government, he added.

“1MDB is transferring the assets out so they can be independently developed. 1MDB will become a non-operating shell company with the debt, “ Arul told the New Straits Times yesterday.

“The debt will be repaid through future cash flows from the asset transfers,” he added.

Arul was asked to comment on the Finance Ministry’s decision to implement various recommendations in the Public Accounts Committee (PAC) report on 1MDB.

One recommendation is the transfer of its ownership in Bandar Malaysia Sdn Bhd, TRX City Sdn Bhd, and well as Air Itam land and Pulau Indah land to the Ministry of Finance Incorporated (MoF Inc).

When asked if he expects to tender his resignation once completing all his tasks with 1MDB, Arul said: “It is difficult to say at the moment.”

Besides the assets transfer, MoF yesterday also announced that it would dissolve 1MDB’s board of advisors and had accepted the resignation of its board of directors as recommended by the PAC report.

MoF added that Article 117 would be removed and all references would be changed from “Prime Minister” to “Minister of Finance”, in the 1MDB Memorandum and Articles of Association.

As for Arul, MoF said he would stay on as 1MDB president until further notice.

Arul would continue to focus on implementing the rationalisation plan, which will include resolution of the recent contractual dispute with Abu Dhabi’s sovereign fund International Petroleum Investment Co (IPIC), it added.

PAC chairman Datuk Hassan Arifin declined to comment on the MoF decision.

“I have to remain independent about this matter, so no comment,” he said.

1MDB’s rationalisation plan involved a “debt for asset swap” with IPIC, a sale of equity in Edra Energy, a sale of equity in Bandar Malaysia, sale of master-planned land in Tun Razak Exchange and disposal of non-core assets.

The combined proceeds from the plan will substantially reduce 1MDB’s debt to a sustainable and manageable level, it had said.