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1MALAYSIA Development Berhad (1MDB) may have dodged the RM2 billion (S$756.8 million) debt bullet for now, but the reputational blow suffered by the debt-saddled state-backed firm from the crisis could prove tough to recover from.
This loan, twice rolled over since last November to end-January this year, that was owed by the controversial firm to Malaysian banks had set off deep concerns of a looming default risk in the country.
The episode, among others, also fanned worries that the firm was beginning to feel the impact of being crushed under a huge debt strain; as at end March 2014, loss-making 1MDB's debt had ballooned to RM42 billion from RM36 billion a year ago.
Last Friday, 1MDB broke its silence and issued a statement that it had fully settled the debt.
"I can now confirm that 1MDB has settled, in full, a RM2 billion loan owed by an operating subsidiary of ours to Malaysian banks. The loan was settled in advance of the due date, per the terms of the loan facility agreement," said 1MDB's boss Arul Kanda Kandasamy.
It was a statement that was meant to placate worried Malaysians, although the firm may have been overzealous in referring to it as "advance" repayment, a term best employed when debt is settled before its original maturity date and less so, when it was refinanced less than a year ago and rolled over twice - for a month - and settled days before the extended grace period was up to avert a default.
"With the settlement of this loan, I reaffirm 1MDB's commitment to continue meeting all our debt obligations as they become due," Mr Arul added.
No other details were provided but it was widely believed that the funds for 1MDB to repay the loan involved Malaysian tycoon Ananda Krishnan - indeed, a glaring anomaly for Malaysia Inc when a private entrepreneur's aid is required to help settle a state-owned firm's debt dilemma.
Even so, over the weekend, Mr Arul was reported to have quashed as speculation the notion that Malaysia's second richest man, Mr Krishnan, had helped the firm resolve its debt woes.
Details aside, if 1MDB's financial troubles were mostly perceived as baseless suspicions by alarmists in the past, there now appears to be a growing number of believers that real trouble may be lurking in the six-year-old firm.
There are plenty more fires to fight - high interest costs, a sizeable debt burden that needs to be settled, a desperately-needed stock offering which may be uncertain now - as Mr Arul tears through 1MDB's operations to come up with a strategic turnaround plan.
But another crisis could soon unfold if as, The Business Times had reportedly recently, 1MDB walks way from its much-vaunted 2,000 megawatts power plant project called Project 3B that it had tied up with Japan's Mitsui & Co to undertake.
It's a confounding move which could have several jarring repercussions.
For one thing, could 1MDB still push ahead with the initial public offering and woo investors' monies with its most prized asset - Project 3B is only one of two greenfield projects in its energy portfolio of largely old power plants - out of the equation? More importantly, if it does indeed scrap the IPO, how will the firm settle its debt woes?
Walking away from Project 3B also dilutes 1MDB's long-held commercial argument that it had not over-paid for the power assets bought from Mr Krishnan three years ago as these assets held the firm in good stead to bid for other coal and gas-fired plants.
More importantly, another key question arises. Last September, according to 1MDB's latest accounts, it had coughed up a considerable amount of money - reportedly at least RM830 million - to Abu Dhabi's Aabar Investments to cancel an option for Aabar to pick up a stake in the future IPO of its energy assets; the payout was likely based on the valuation of the assets then, which would have included Project 3B.
Was 1MDB too hasty in scrapping Aabar's options to partake in a stock offering, which portfolio may be downsized and prospects look murky right now? And did 1MDB overpay to do that, at a time when it had other crucial debt obligations to meet? Back to you, Mr Arul.