At the Forum Perdana in PWTC earlier yesterday, Arul Kanda Kandasamy, the president and group executive officer of 1MDB, provided a detailed briefing on 1MDB and replied without reservation to various pointed and pertinent questions raised by the audience. This briefing was open to all Malaysians and covered by various media organisations, including alternative media.

1MDB regrets to note that one wrong headline relating to financial costs by The Malaysian Insider (which was subsequently corrected), appears to have been widely and wrongly circulated, including in an Instagram posting that appears to have originated from one Nazir Razak.

Further, 1MDB notes that a number of online news portals and certain bloggers have in the course of today raised queries relating to the Brazen Sky fund unit redemptions, which was another topic covered at the briefing.

1MDB repeats below, clarifications that have previously been issued on both matters, to reiterate the facts of the matter.

1. Financial Costs

1MDB had previously published a table (which was shared again at the Forum Perdana today), showing the use of its RM42 billion of debt. In this table, there is a line item ‘Financial Costs’ with a total of RM5.8 billion, between the years 2009-2014. The vast majority of this cost relates to interest payments, for example, RM2.4 billion in 2013-2014 and RM1.6 billion in 2012-2013. The remainder of the costs comprise interest between 2009 and 2012, working capital costs, amortised fees, foreign exchange costs and tax paid by the company’s energy subsidiaries.

2. Fund Unit Redemptions

As of March 31, 2014, the fund units in a Cayman registered fund, owned by 1MDB subsidiary Brazen Sky, were valued at US$2.33 billion. On Nov 5, 2014, at the time 1MDB’s financial statements for the year ended March 31, 2014 were published, an amount of approximately US$1.22 billion had been redeemed, in cash, with proceeds being substantially utilised for debt interest payment, working capital and payments to Aabar as refundable deposits for options termination.

On Nov 14 and 24, 2014, approximately US$170 million of the fund units were redeemed, in cash. Accordingly, approximately US$1.4 billion of fund units were redeemed, in cash, leaving a balance of approximately US$940 million in fund units.

On Jan 2, 2015, a final redemption of approximately US$940 million was undertaken through a sale of fund units to Aabar, with cash payment being deferred. This Jan 2 fund unit sale agreement was subsequently superceded (i.e. replaced) by the Binding Term Sheet that was signed on May 27, 2015 between 1MDB and IPIC, the ‘AA’ rated parent of Aabar, upon which a payment of US$1 billion was made by IPIC to 1MDB.

1MDB has previously stated, and reiterates, that the remaining US$940 million of fund units will form part of the US$ cash deposits and US$ fund unit assets to be transferred by 1MDB to IPIC, for the ‘debt for asset swap’, in which IPIC will then take over 1MDB debt of approximately RM16 billion.