Tuesday, April 12, 2016

How is the disposal of overpriced assets at a loss a "success, against all odds"?

I had to shake my head in sheer disbelief with 1MDB boasted of its recent achievement in repaying RM950 million of its debt to the Government with proceeds from assets which were sold at a substantial loss.

Yesterday, 1MDB said its President, “Mr Arul Kanda has delivered major asset sales and repaid all short term debt/bank debt, with 1MDB now having RM2.3 billion cash in the bank. The company has also recently repaid the RM950 million standby credit facility from the Government of Malaysia. Even YB Tony has no choice but to admit this success, against all odds.”

I am left speechless that Mr Arul Kanda, a so-called top investment banker and debt-restructuring expert can shower himself with such hugely undeserved praise.

Perhaps, Mr Arul Kanda has forgotten that he has been forced to admit that the power plant assets which were acquired for RM12.1 billion were sold for a loss at RM9.83 billion. The proceeds was used to pay off RM950 million of the Federal Government’s emergency loan granted last year. However, US$3.5 billion (RM13.6 billion) worth of bonds which were raised to purchase these power plants remains outstanding!

So Mr  Arul Kanda’s achievement was to dispose of overpriced power plants at a loss, and leave 1MDB with a gaping hole of US$3.5 billion of related-debts in 1MDB’s books, with no assets left to pay back.

I  have “no  choice”  but  to  admit  that  I  am  flabbergasted  by  Arul  Kanda’s  definition  of “success, against all odds”.
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