Sale of Edra: Clarification on false allegations by Tun Dr Mahathir


1MDB refers to a blog post relating to the sale of Edra by YABhg Tun Dr Mahathir Mohamad, a retired and former politician, who has failed in his numerous attempts to politicise the 1MDB issue. We regret that Tun Mahathir persists in issuing misleading and wrong statements on 1MDB, which is then reported in an irresponsible manner, without analysis or journalistic enquiry, by certain online media portals.

Through the sale of Edra to CGN Group, based on Edra 31.03.2015 financial statements, 1MDB will receive for its equity, cash of RM9.83 billion. In addition, CGN Group will take over debt in the Edra operating assets of RM7.43 billion. Accordingly, through cash receipts and debt transfer, 1MDB will achieve debt reduction of up to RM17 billion, which is well within the anticipated RM16 billion to RM18 billion range per the rationalisation plan. Arul Kanda, the President and Group Executive Director of 1MDB, has clearly explained these facts, which were reported in the media last week.

It is important to clarify that the up to RM17 billion debt reduction is over and above the approx. RM2 billion cash dividends that 1MDB has received over time from the power assets during its ownership. Accordingly, 1MDB has essentially “broke even” on its investment, through an international tender process, despite having to sell its assets whilst under sustained and misleading attacks from the opposition and Tun Mahathir himself.

If Tun Mahathir took the trouble to review Note 29 (v) of 1MDB’s 31.03.2014 publicly available audited financial statements, he would realise that of the RM42 billion 1MDB debt, RM19.82 billion of debt is denominated in Ringgit Malaysia and RM22 billion is denominated in USD.  Accordingly there is more than enough RM denominated debt to be settled from the RM9.83 billion Edra sale cash proceeds.

As for the USD debt which so concerns Tun Mahathir, per the binding term sheet executed with IPIC on 28 May 2015, it is the intention of 1MDB that USD3.5 billion of IPIC guaranteed bonds will be settled via a “debt-for-asset swap” with IPIC. This envisages 1MDB transferring to IPIC, 1MDB assets comprising USD denominated cash deposits and USD denominated fund units, in return for IPIC taking over the USD3.5 billion of bonds that it has guaranteed.

Tun Mahathir has also misled his blog readers by failing to mention that the IPP tariff for the Edra assets are fixed for the life of the PPA (power purchase agreement) period. On average across all the Edra power plants, this is for the next 10 years. So, there is no question of the IPP tariff being increased for the life of the PPA, despite the change of ownership.

Tun Mahathir has repeatedly misled the public with false statements. Most infamously, he is on the record as saying “RM42 billion hilang” (“RM 42 billion missing”) from 1MDB. The sale of the Edra operating assets, with a debt reduction of up to RM 17 billion, clearly shows how Tun Mahathir was and continues to be, wrong. Secondly, Tun Mahathir has repeatedly insinuated that RM2.6 billion in the accounts of Prime Minister YAB Dato’ Sri Najib Tun Razak was from 1MDB. This is despite the MACC publicly issuing three statements that no funds from 1MDB went into the accounts of Dato’ Sri Najib.

1MDB requests that Tun Mahathir uses facts and figures in his arguments and to stop his misleading and wrong political attacks on 1MDB. We further urge the online news media to also properly analyse and use critical analysis prior to publishing such wrong and misleading statements by this retired, former politician.