Malaysia's $1.7 billion
property deal to cut 1MDB debt falls through
Send a link to a friend
[May 03, 2017]
LUMPUR (Reuters) - A $1.7 billion property deal that was expected to
ease the debt burden of Malaysian state fund 1Malaysia Development
Berhad (1MDB) fell through on Wednesday, complicating Prime Minister
Najib Razak's efforts to move on from a financial scandal surrounding
TRX City Sdn Berhad, a former 1MDB division now owned by the Malaysian
finance ministry, said a deal to sell 60 percent of Bandar Malaysia - a
major real estate development project in Kuala Lumpur - lapsed because
the buyers "failed to meet the payment obligations."
In December 2015, Iskandar Waterfront Holdings – owned by Malaysian
tycoon Lim Kang Hoo - and China Railway Engineering Corp had said they
would buy a 60 percent stake in Bandar Malaysia from 1MDB for 7.41
billion ringgit ($1.72 billion).
Iskandar Waterfront and CREC could not be immediately reached for
Prime Minister Najib had said at the time that this sale, plus other
deals, would mean 1MDB's major challenges were now behind it.
1MDB had racked up more than $11 billion in debt before beginning a
restructuring program in 2015. The fund is also the subject of
money-laundering investigations in at least six countries.
1MDB has denied any wrongdoing.
"TRX City will immediately be inviting expressions of interest for the
role of master developer of Bandar Malaysia, with full ownership being
preserved by the Ministry of Finance," the company said in a statement.
TRX City was originally owned by 1MDB but the finance ministry took
control last year as part of its efforts to clean up the financial
fallout from the scandal. TRX City said the finance ministry would
remain its sole shareholder.
[to top of second column]
A construction worker
talks on the phone in front of a 1Malaysia Development Berhad (1MDB)
billboard at the Tun Razak Exchange development in Kuala Lumpur,
Malaysia, February 3, 2016. REUTERS/Olivia Harris/File Photo
When the Bandar Malaysia deal was first announced, 1MDB said Iskandar Waterfront
would hold 60 percent of the venture buying the 1MDB stake, while China Railway
Engineering would hold the rest.
The Bandar Malaysia development will include a hub for a digital free trade zone
and a terminal for the high speed rail connecting Kuala Lumpur and Singapore.
Last week, 1MDB agreed to pay $1.2 billion to Abu Dhabi's International
Petroleum Investment Co (IPIC) to resolve a debt dispute, a move giving a boost
to Najib ahead of elections that could be called later this year.
(Reporting by Praveen Menon and Liz Lee; writing by A. Ananthalakshmi; Editing
by Muralikumar Anantharaman and Jane Merriman)
[© 2017 Thomson Reuters. All rights
Copyright 2017 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.