1MDB’s Second Extension from IPIC for Missed Payment

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1MDB failed to pay IPIC on Jul 31, was given a five-day extension to today, failed to pay again, now given another extension.

1Malaysia Development Bhd (1MDB) has been given an extension to resolve the payment issue with International Petroleum Investment Co (IPIC), said Finance Ministry Secretary-General, Tan Sri Mohd Irwan Serigar Abdullah.

“We are asking for an extension which they have agreed and when the time comes, we will pay off,”  said Irwan, who is also 1MDB chairman.

He said 1MDB would sign another agreement for the extension of payment to Abu Dhabi-based IPIC.

“We are talking to IPIC to try arrange time to pay off. We will pay off to IPIC,” he told reporters today.

On why it took time to pay off to IPIC, Irwan said: “It’s the selling of the units and there are some regulatory requirements and so on.

“We need to comply with all these. It will take time which we didn’t foresee. So all this thing will be settled.” 

1MDB has previously written to IPIC to inform them that the payment, originally due on Jul 31, 2017, will be paid in August 2017 instead as it awaits the necessary fund.

Abu Dhabi said last week that 1MDB and Malaysia’s finance ministry will be subject to “additional obligations” if no payment was made at the end of the five-day deadline.

Part of a settlement over a debt dispute, the US$603 million (about RM2.58 billion) due is the first of two instalments totalling US$1.2 billion.

The Edge Markets reported that in a filing to the London Stock Exchange, IPIC said it has granted 1MDB and its guarantor, Ministry of Finance (Inc) Malaysia (MoF Inc), until Aug 31 to complete the payment obligations.

“This extension is subject to MoF Inc and 1MDB making payment of not less than US$310 million (RM1.33 billion) of the full amount due on or before Aug 12,” said IPIC.

According to The Edge Markets, 1MDB was still waiting to receive funds from its rationalisation plan – namely, the monetisation of its fund units held under Brazen Sky (reportedly US$940 million) and 1MDB Global Investment Ltd (estimated US$1.5 billion).

Allegations of fraud involving 1MDB have already spooked investors by weighing on Malaysia’s economy and its currency, FMT reported.

Missed payments by 1MDB, which is owned by the Malaysian finance ministry, are a matter of concern for foreign investors, who own a significant share of outstanding government bonds in Malaysia.

On Tuesday, after the news of the extension, 1MDB’s 5.99% notes due 2022 rose to 108.291 to the dollar as of 2.07pm in Kuala Lumpur, according to prices compiled by Bloomberg. The yield has dropped about 48 basis points in 2017.

Earlier report: Aug 2, PM Says 1MDB Can Afford IPIC Payment, Delay Due to “Technical Issues”