1MDB has skipped out on a multi-million payment to Abu Dhabi’s authorities, escalating an ongoing dispute over the scandal-engulfed Malaysian state fund.
1MDB and International Petroleum Investment (IPIC), an Abu Dhabi sovereign wealth fund, are locked in a tussle over the repayment of two bonds worth $3.5 billion issued by the Malaysian investment company.
After the bonds defaulted last year, IPIC – now part of the larger Mubadala fund – was seeking $6.5 billion from 1MDB and the Malaysian government. The two buried the hatchet in arbitration proceedings in London earlier this year.
Now, 1MDB has missed a $603 million payment to the IPIC. The repayment proceeds would have come from a so-called rationalization plan, according to «Bloomberg» – including selling 1MDB's investments.
Regulatory Delay
The funds that were expected to arrive last month have been delayed till August due to regulatory approvals, 1MDB told the newswire.
«As these are the funds which will be used to pay IPIC, 1MDB has written to IPIC to inform them of our commitment to meet the obligations this month,» it said.
On top of the repayment, 1MDB would also assume the coupon and principal obligations for the $3.5 billion of bonds issued by it and co-guaranteed by IPIC. The settlement hinges on 1MDB selling its fund investment fund units, the fund said at the time.
Five-Days' Grace
The sale of an 1MDB-developed real estate project, Bandar Malaysia, was to have contributed to the rationalization plan, but reportedly fell apart in May.
IPIC said in a filing it hadn’t received the payment, as well as a further $26 million amount due on July 31. Clearly impatient, Abu Dhabi granted a mere five-business day grace period for 1MDB to make the payment before additional obligations kick in.
The payment is part of a settlement over a debt dispute and is half the amount 1MDB and the Malaysian finance ministry agreed to make to IPIC. A second payment is due by the end of 2017.
