Abu Dhabi fund says 1MDB in default on US$1 billion deal
(Asia One) – An Abu Dhabi sovereign fund said on Monday Malaysia’s troubled state fund 1Malaysia Development Berhad ( 1MDB) was in default of its obligations on US$1.1 billion (S$1.49 billion) in debt and interest.
The International Petroleum Investment Company (IPIC) said in a filing to the London stock exchange, where it is listed, that it was now considering all its options to remedy the default. That included referring the matter to the appropriate dispute resolution forum, the IPIC statement said.
The Abu Dhabi fund said it was terminating last June’s agreement, under which it agreed to provide US$1 billion in cash as well as assume payments on US$3.5 billion of 1MDB debt. It also forgave an undisclosed amount of debt that 1MDB owed to IPIC, in exchange for assets which have not been named.
The Abu Dhabi fund said 1MDB and Malaysia’s finance ministry – which owns 1MDB – are in default on the terms of this agreement.
The development came after IPIC’s denial last week that it owned a British Virgin Islands company, Aabar Investments PJS Ltd, which received payments of US$3.5 billion from 1MDB meant for the Abu Dhabi fund.
Malaysia’s Ministry of Finance (MOF) said it would honour all its commitments in financial markets. “The MOF wishes to make clear that it will continue to honour all of its outstanding commitments in the financial markets,” the ministry said in a statement late on Monday.
The assurance followed a statement by 1MDB that Abu Dhabi had agreed to assume its interest payments on a US$1.75-billion bond, but one such payment, due on Monday, had not been paid because of the dispute between the two.
“1MDB wishes to make clear that it and its group entities will meet all of their other obligations under any other financing arrangements and have ample liquidity to do so,” it said in a statement.
The Malaysian fund did not say whether it would make the interest payment due on Monday.
In an earlier statement, 1MDB said it had repaid all its bank debt and short-term obligations, and had a cash surplus of about 2.3 billion ringgit ($585.2 million).
Over the past four weeks, 1MDB has made debt principal repayments of about 7.25 billion ringgit, it said.
