1MDB will update market soon on loan from Deutsche-led group, CEO says

Arul Kanda said the firm cannot discuss details of the loan at the moment due to the confidentiality of the deal, but said they intend to explain the matter when possible. ― Reuters pic
Arul Kanda said the firm cannot discuss details of the loan at the moment due to the confidentiality of the deal, but said they intend to explain the matter when possible. ― Reuters pic

KUALA LUMPUR, May 13 ― 1Malaysia Development Bhd (1MDB) chief executive Arul Kanda Kandasamy said today the state investment arm will "update" the market about the status of its RM3.6 billion loan with a Deutsche Bank-led consortium once it is in the position to do so.

Arul Kanda said the firm cannot discuss details of the loan at the moment due to the confidentiality of the deal, but said they intend to explain the matter when possible.

"We are aware of recent press reports and statements concerning a loan taken by 1MDB in September 2014.

“Whilst we would like to respond in detail, this relates to a confidential banking matter, which prevents us from commenting at the present time.

"However, we intend to update the market as soon as we are in a position to do so," Arul said in a statement made available to Malay Mail Online.

According to Singapore’s Business Times today, lenders spooked by the controversy surrounding 1MDB are contemplating demanding the full settlement of a US$975-million (RM3.6 billion) loan ahead of its due date in August.

More worrying for the state-owned investor is that the consortium led by the Deutsche Bank Singapore could trigger cascading defaults on the remainder of 1MDB’s reported RM42 billion debt if they declare the firm to be delinquent.

The consortium’s fears are said to be prompted by “incomplete” documents that 1MDB provided as a form of security, rendering the terms of the loan unmet. This alleged breach allows the banks to rescind the loan ahead of the August due date.

The loan was secured via the US$1.103 billion that 1MDB said was being held by its Brazen Sky unit in BSI Singapore, originally from a tranche of offshore deposits it previously kept in the Cayman Islands.

The BT said the banks and 1MDB are currently in “intense negotiations” to prevent a recall of the loan that the Malaysian state investor took to pay Abu Dhabi's International Petroleum Investment Company (IPIC) to terminate an option to subscribe for the future listing of 1MDB's power asset, Edra Energy.

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