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Malaysia scraps plan to find investors for 1MDB's energy unit
[KUALA LUMPUR] Malaysia has scrapped a plan to find a potential buyer for 1Malaysia Development Bhd's energy business as the government said it remains focused on an initial public offering for the unit of the state investment company.
A week after CIMB Group Holdings Bhd announced its appointment by the Ministry of Finance to run a "competitive" sale process for Edra Global Energy Bhd, the lender said in a statement on Wednesday that it had been informed its services are no longer required. Edra is proceeding with plans to submit an application to list on the Malaysian stock exchange, the finance ministry said in a separate statement.
"This remains the preferred course of action for the monetization of these assets," the finance ministry said. Deutsche Bank AG and Malayan Banking Bhd. are advising Edra on the transaction, it said.
1MDB, whose advisory board is headed by Prime Minister Najib Razak, announced plans in February to dismantle its assets after it drew criticism from lawmakers for rising borrowings that totaled RM41.9 billion (S$15.55 billion) as of March 2014. Its ability to service its debt was put in question after it delayed payment of a loan of RM2 billion by about three months.
The government provided 1MDB with a RM950 million credit facility last month to help the company make changes to its operations and structure after the completion of a strategic review in February.
1MDB is preparing to re-submit an application by May for an IPO of Edra that could raise as much as US$3 billion, people familiar with the matter said last month.
The state investment company formed its energy business by buying assets from Malaysian billionaire T Ananda Krishnan and Genting Bhd. It agreed to pay RM8.5 billion in 2012 for Krishnan's power interests, which included plants in Malaysia, Egypt, Pakistan and the United Arab Emirates.