1Malaysia Development Berhad (1MDB) has executed a deal of RM9.83 billion to sell its entire equity in all its power assets held under Edra Global Energy Berhad to China General Nuclear Power Corp (CGN Group) yesterday.
1MDB borrowed USD3.5 billion and RM7.4 billion (approximately RM22 billion) to acquire its power companies for RM12.1 billion, which came with approximately RM8 billion of legacy debt.
Now 1MDB desperately sold its power companies for RM9.83 billion, clocking in RM2.27 billion of losses, despite the fact that Government has awarded 1MDB many new power contracts and extended its expiring contracts.
For example, Genting Sanyen which was acquired for RM2.3 billion was only worth about RM400 million in Genting’s books because there was less than 3 years left to the concession agreement. However, the government has subsequently extended the contract for 10 years.
Despite of the extensions and new contracts, 1MDB only managed to sell its energy assets for RM9.83 billion. This proved the fact that 1MDB overpaid for its assets resulting in massive losses for the wholly owned MOF subsidiary.
Worse, despite clawing back RM9.83 billion and getting rid of the RM8 billion of legacy debt, the sale still leaves 1MDB with RM12.17 billion of debt arising from the loans it took for the acquisition.
How will the RM12 billion of debt now be settled given that 1MDB has no more power assets and hence no more profit generating capacity?
More importantly, where have all the money gone to?
We know Genting Group has mysteriously contributed an extraordinary RM190 million for “CSR” under its various subsidiaries. Of this CSR expenditure, at least part of it, ie RM31 million, went to Yayasan Rakyat 1Malaysia, which spent the money for elections in 2013. Yayasan Rakyat 1Malaysia, WSJ said, lists Najib as chairperson on its website.
But, how about the rest of the money?