KUALA LUMPUR, Oct 28 — 1Malaysia Development Bhd (1MDB) should be allowed to implement its rationalisation plan so that the company can reduce its reliance on government assistance.
“We should be given the opportunity to implement our rationalisation plan in order for us not to go back to the government for additional (financial) support,” 1MDB President and Group Executive Director Arul Kanda Kandasamy said.
He said 1MDB had received RM1.0 million direct equity from the government in 2009 and borrowed RM950 million in March from the government.
Arul Kanda said this at a special programme titled “Bernama TV with Arul Kanda” hosted by Suriati Sanusi and co-hosted by Deputy Editor-In-Chief for Bernama Economic Service, Mikhail Raj Abdullah.
The programme would be aired on Astro 502, HyppTV 410 and www.bernama.com. at 10 pm tonight.
“We’re today at the crossroads, in a situation where there is need to service debt and invest in our businesses.
“Given the scenario, we are having discussions with our shareholder, the Ministry of Finance, and we are confident with our plan.
“The best option would be to dispose off the equity in Edra Energy or bring in new investors to Bandar Malaysia in efforts to pare down debt to a sustainable level,” he said.
Arul Kanda, a banker by profession who has worked in the United Kingdom and Dubai, was appointed President and Group Executive Director in January this year after its Managing Director and Chief Executive Officer, Mohd Hazem Abd Rahman resigned.
Arul Kanda said 1MDB was set up as a strategic development company with a vision to be a catalyst and stimulate foreign direct investments for the government.
“When it was set up, the government decided that 1MDB should fund itself through debt, bank loans and (funds from) the capital market.
“This was to create discipline, where you’ve debt you’ve to pay interest and principal, as well as, frees up government funds for other purposes like schools and hospitals and so on,” he said.
However, the problem arose when there was a mismatch of cash flow generated from its long-term assets versus short term needs to service interest payments and principal that were due.
This was mainly due to the unsuccessful attempt to list its power generation division, Edra Global Energy Bhd on Bursa Malaysia.
“Thus, the government took clear steps to implement the rationalisation plan to overcome this cash flow mismatch through selling equities in some of 1MDB’s assets in order to raise funds.