KUALA LUMPUR, March 16 — There is no possibility of 1 Malaysia Development Berhad (1MDB) resolving its cash flow problems by year end despite the billions of ringgit it expects to raise at its anticipated initial public offering (IPO) this September, DAP MP Tony Pua said today.

The Petaling Jaya Utara MP said Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah must have been “joking” when he claimed this was possible last week, pointing out that even even the IPO would not help settle 1MDB’s RM42 billion debt.

He said the state-owned investment firm would need a minimum RM5 million injection by the federal government to help it stay afloat.

Even then, Pua said the injection would only prove temporary.

“Come 2016, after selling off some 80 per cent of its only profitable division in the IPO, 1MDB will have no income generating assets to service or repay its massive outstanding debt,” the DAP national publicity secretary said in a statement today.

He was referring to 1MDB’s energy unit, which the firm plans to list this September in hopes of raising enough cash to help pay off a portion of its debts.

According to Pua, however, with the RM12 billion valuation of 1MDB’s energy arm, the sale of 80 per cent of its stake would only raise some RM9.6 billion, which is less than half the value of the loans the firm took to acquire its energy subsidiaries to begin with.

“The IPO will not even be sufficient to clear the loans it has taken to acquire its energy subsidiaries, much less the balance of the RM42 billion loans,” he said.

1MDB’s property wing, on the other hand, was valued at just RM7.08 billion as at March 31, 2014, even after it was upwardly revalued by RM3.95 billion over the last few years.

Pua agreed with Husni’s admission that 1MDB’s property projects would only take off at the earliest in 2016.

As such, the DAP lawmaker asked Husni to explain his claim that 1MDB’s cash flow problems could be resolved by yearend.

In his comments in The Star on Saturday, Husni reportedly claimed in Ipoh that this is possible, and added that 1MDB is involved in long-term investment, “so to reap profits from its investments will take some time”.

The minister also claimed that 1MDB’s cash problems were not due to management problems or misappropriation, according to the English daily’s report.

“What are these so-called 1MDB’s ‘long-term investment’?” Pua asked today.

“After the proposed 80 per cent disposal of 1MDB’s energy division, there’s nothing left in the company except for the RM7.08 billion of property assets.  If there are no investment assets left in 1MDB, how could it possibly generate ‘real profit’ in the future to pay its debts?” he said.

He also asked the minister to explain his claim that 1MDB was not in financial straits because of misappropriation or management issues.

“Then how did 1MDB’s debts of RM42 billion as at March 2014 far outstrip its 2 key assets – RM10.9 billion in power and RM7.08 billion in real estate?

“That’s even assuming that the valuations for these assets are not overly inflated.  Where did all the rest of the money from its debt go?” he asked.