KUALA LUMPUR, Feb 23 — Malaysian state fund 1MDB said today that the refinancing of its debt will involve the Finance Ministry “as relevant and as required” after media reported that the government may inject up to RM3 billion into the fund, international news agency Reuters reported.

The newswire service cited from The Edge Financial Daily, which said that the Finance Ministry — which owns 1MDB — may have to inject cash as the fund’s income from its power assets is insufficient to service its debt .

“1MDB announced the outcome of its strategic review, in which we emphasized that 1MDB will seek refinancing “from the best available sources”,” said 1MDB.

“We further stated that our 100 percent shareholder, the Ministry of Finance will be involved, as relevant and as required, in the interests of maximising shareholder value.”

1MDB last week said it would explore asset sales and the sale of development rights in prime property projects as it seeks to cut its debt, a US$11.6 billion burden that has weighed on the ringgit and the country’s sovereign credit rating.

Earlier this month, 1MDB settled a RM2 billion loan it owed to banks but sources have said it needed a loan from Malaysia’s second-richest man Tan Sri T. Ananda Krishnan to do so.

Earlier today, The Edge cited unnamed sources saying 1MDB lacked the cash to service its debts due to insufficient income from its power assets.

The same anonymous sources were reported expressing surprise that 1MDB’s Arul Kanda Kandasamy had dismissed media reports on the company turning to Ananda as mere speculation, yet remained silent on the source of the company’s cash flow that kept the banks from declaring a default.

According to the local business paper, officials in the Finance Ministry know 1MDB’s cash flow problems and its limited options that may force the government to intervene and are preparing money for the RM3 billion shot that must be given before the investment fund’s next financial year which ends on March 31.

“The size of its debt of RM42 billion, the massive negative cash flow it has experienced in the last two years plus its struggle to pay the RM2 billion makes it difficult for any bank to lend to them.

“Bond investors will also shy away from any new debt it wants to issue,” The Edge cited one anonymous banker as saying. — Reuters