Malaysia state fund 1MDB plans to pay US$1.5b in debt soon

[KUALA LUMPUR] The Malaysian state investment company at the center of multiple financial probes said it will repay RM6 billion (US$1.5 billion) in coming weeks as asset sales give it room to pare down debt.

1Malaysia Development Bhd won't have any more short-term debt and bank loans after the repayments, President Arul Kanda said in an interview on Wednesday at the fund's headquarters in Kuala Lumpur. It will have a cash surplus of at least RM2.3 billion after settling the debt, he said.

"All the short-term debt, all the bank debt will be repaid" within the next three weeks, said Kanda, a trained lawyer who has led the fund since January 2015. 1MDB announced last week it had settled a RM700 million syndicated term loan.

1MDB, whose advisory board is headed by Prime Minister Najib Razak, has been the subject of overlapping investigations in Malaysia and countries including Singapore and Switzerland amid allegations of financial irregularities. Having almost defaulted on a loan, it announced last year it will transfer much of its business to standalone entities. 1MDB has consistently denied wrongdoing.

Set up by the government in 2009 to build infrastructure with borrowed money, 1MDB started facing cash flow problems in 2014 after a planned initial public offering of energy unit Edra Global Energy faced delays amid an unfavorable market. 1MDB owed RM42 billion as of March 2014.

The fund said it won't make any new investments or undertake projects once it wraps up some existing deals. 1MDB has now sold Edra to China General Nuclear Power Corp for RM9.83 billion.

The sale of 1MDB's assets and other agreements would see its debt reduced by about RM40.4 billion, or the "overwhelming majority" of its obligations, Najib said at the end of last year.

BLOOMBERG