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Malaysia's 1MDB said to be in final stages of talks with Ananda Krishnan
[KUALA LUMPUR] 1Malaysia Development Bhd is close to agreeing on details of a deal with billionaire T. Ananda Krishnan that would help the state-owned investment company raise cash to repay debt, people familiar with the matter said.
1MDB, whose advisory board is headed by Prime Minister Najib Razak, plans to make an announcement by next week, said one of the people, who asked not to be identified as the talks are private. Final details are still being discussed and may include Mr Ananda taking a stake in energy assets the state-owned company plans to list or providing a loan, said a second person. Other alternatives such as options and warrants are also being considered, this person said.
The Kuala Lumpur-based company had not been able to repay a RM2 billion (S$753 million) loan owed to Malayan Banking Bhd and four other lenders since November, the Edge newspaper reported on Jan 6.
It was given a third 30-day extension last month and the debt will come due at the end of February, people familiar with the matter said on Jan 27.
The agreement with Mr Ananda would allow repayment of the loan and may help pave the way for listing Edra Global Energy Bhd unit, which will allow the Kuala Lumpur-based entity to cut borrowings further. 1MDB's debt stood at RM41.9 billion as of March 2014, according to its annual report.
1MDB had planned to list Edra Global last year in a US$3 billion initial public offering that would have been Malaysia's biggest since Felda Global Ventures Holdings Bhd went public in 2012.
The share sale had to be delayed because 1MDB was unable to settle the debt owed.
1MDB started its energy business by buying assets from Mr Krishnan and Genting Bhd. It agreed to pay RM8.5 billion in 2012 for Mr Krishnan's power interests, which included plants in Malaysia, Egypt, Pakistan and the United Arab Emirates.
Mr Krishnan is Malaysia's second-richest person with a net worth of US$9.3 billion, according to the Bloomberg Billionaires Index.
The state company named Arul Kanda, the former investment- banking head at Abu Dhabi Commercial Bank PJSC, as president last month. Mr Kanda said in a Jan 6 interview that 1MDB is embarking on a strategic review of its operations.
The company redeemed a US$2.32 billion investment it had in a Cayman Islands fund, it said in a Jan 13 statement.