KUALA LUMPUR, Oct 31 — The debts accumulated by 1Malaysia Development Berhad (1MDB) was due to cash flow “mismatch” because the company failed to be publicly listed, according to 1MDB president Arul Kanda Kandasamy.
He said 1MDB’s failure in carrying out its initial public offering (IPO) of its energy companies resulted in its inability to pay back its debts on time.
“Debts was the basis for 1MDB. When you use debts, there is a need to pay back the debt and service the principle.
“If you do not meet debt repayments, the repercussions are very high. There was a cash flow mismatch because of the failed IPO. The company faced a big challenge to pay back the debt,” Arul Kanda told reporters at a press conference today.
He reiterated that the IPO was not possible due to “internal and external factors” that influenced 1MDB’s companies from being public listed.
Arul Kanda added that 1MDB was selling off its assets and that it will be able to meet its debt repayments.
“The amount of debt and interest need to pay is too high and company did not make enough cash flow. We decide will sell certain assets.
“We also opened up equity of some of core projects like Bandar Malaysia,” Arul Kanda said explaining that most of 1MDB’s debts will be able to be paid off by selling off its assets.
The lawyer by training also said that 1MDB also has obtained a RM950 million loan from the government to help pay its debts which he insisted would be paid back.
“When you take into consideration the debt that 1MDB has gone through, the cost of interest RM2.5 billion every year. That is a big number , if you do not reduce your debt, the interest has to be serviced.
“To meet short term cash flow requirement of the county we obtained financing and loan of RM950 million to help us from the government.
“We fully intent to repay this loan as we go through the rationalisation process,” said Arul Kanda.
