Abu Dhabi claims Malaysia’s 1MDB defaulted on $1.1-billion-debt

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1MDBAbu Dhabi-based, stated-owned investment firm International Petroleum Investment Company (IPIC) said on April 18 that Malaysia’s government fund 1Malaysia Development Berhad (1MDB) defaulted on $1.1 billion in bond repayments it owed in a new blow to the scandal-tainted state investment vehicle.

IPIC had agreed in 2012 to guarantee 1MDB $3.5 billion in bonds, lend it more than $1 billion and receive interest payments on the bonds in a deal related to 1MDB’s energy assets. In a statement, IPIC said that 1MDB and its owner, Malaysia’s Finance Ministry, had failed to pay back more than $1.1 billion as per a agreement inked last June.

“As a result, 1MDB and the Ministry of Finance are in default,” IPIC said.

The announcement was made in a filing to the London Stock Exchange by IPIC and raised new concerns of a Malaysian market turmoil as 1MDB seems to be unable to resolve its huge debt problem.

1MDB,  founded by Malaysian Prime Minister Najib Razak in 2009, is said to since have amassed around $11 billion in questionable debt and has t defend itself against accusations from multiple investigations around the world that billions were looted from the fund.

IPIC said it still expected the Malaysian side to honour its commitments and was now considering all its options to remedy the default, including referring the matter to the appropriate dispute resolution forum, the statement added.

IPIC Annual Report 2012
IPIC’s 2012 annual report where the bond guarantee deal is outlined (click to enlarge).

Meanwhile, Malaysia’s Ministry of Finance later on April 18 announced that it would “honour all its outstanding commitments in financial markets.”

With regards to the alleged IPIC default, the ministry added that “1MDB and IPIC are in dispute over the obligations in respect to certain publicly issued notes.”

1MDB was supposed to repay its debt to IPIC via payments to a subsidiary of the fund called Aabar Investments. Contrary to 1MDB’s claims, IPIC said that Aabar never received the money.

A recent report by the Wall Street Journal said 1MDB instead paid more than $2 billion to a British Virgin Islands entity, an apparent shell company with a nearly identical name to Aabar’s. The British Virgin Islands entity has since been shut down, the paper said.

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Reading Time: 2 minutes

Abu Dhabi-based, stated-owned investment firm International Petroleum Investment Company (IPIC) said on April 18 that Malaysia’s government fund 1Malaysia Development Berhad (1MDB) defaulted on $1.1 billion in bond repayments it owed in a new blow to the scandal-tainted state investment vehicle.

Reading Time: 2 minutes

1MDBAbu Dhabi-based, stated-owned investment firm International Petroleum Investment Company (IPIC) said on April 18 that Malaysia’s government fund 1Malaysia Development Berhad (1MDB) defaulted on $1.1 billion in bond repayments it owed in a new blow to the scandal-tainted state investment vehicle.

IPIC had agreed in 2012 to guarantee 1MDB $3.5 billion in bonds, lend it more than $1 billion and receive interest payments on the bonds in a deal related to 1MDB’s energy assets. In a statement, IPIC said that 1MDB and its owner, Malaysia’s Finance Ministry, had failed to pay back more than $1.1 billion as per a agreement inked last June.

“As a result, 1MDB and the Ministry of Finance are in default,” IPIC said.

The announcement was made in a filing to the London Stock Exchange by IPIC and raised new concerns of a Malaysian market turmoil as 1MDB seems to be unable to resolve its huge debt problem.

1MDB,  founded by Malaysian Prime Minister Najib Razak in 2009, is said to since have amassed around $11 billion in questionable debt and has t defend itself against accusations from multiple investigations around the world that billions were looted from the fund.

IPIC said it still expected the Malaysian side to honour its commitments and was now considering all its options to remedy the default, including referring the matter to the appropriate dispute resolution forum, the statement added.

IPIC Annual Report 2012
IPIC’s 2012 annual report where the bond guarantee deal is outlined (click to enlarge).

Meanwhile, Malaysia’s Ministry of Finance later on April 18 announced that it would “honour all its outstanding commitments in financial markets.”

With regards to the alleged IPIC default, the ministry added that “1MDB and IPIC are in dispute over the obligations in respect to certain publicly issued notes.”

1MDB was supposed to repay its debt to IPIC via payments to a subsidiary of the fund called Aabar Investments. Contrary to 1MDB’s claims, IPIC said that Aabar never received the money.

A recent report by the Wall Street Journal said 1MDB instead paid more than $2 billion to a British Virgin Islands entity, an apparent shell company with a nearly identical name to Aabar’s. The British Virgin Islands entity has since been shut down, the paper said.

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