1 MDB Sukuk facility default provisions have been triggered-RM 2.4 billion payable immediately?

by Ganesh Sahathevan

The deluge of "tampered" documents seems never ending.These excerpts are from the 1 MDB, 1 MDB RE , Bandar Malaysia Sdn Bhd information memorandum filed with the Securities Commission. Given the default on the IPIC guaranteed loans, as well as the demand for early repayment of the Deutsche Bank syndicate loan, the consequences of the following provisions are obvious: 



2. PRINCIPAL TERMS AND CONDITIONS -(c) Facility description : 

An unrated sukuk issuance programme based on the Shariah principles of Murabahah (“Sukuk Murabahah”) of up to RM2,400.0 million in nominal value (“Sukuk Murabahah Programme”). 

7. During the tenure of the Sukuk Murabahah, BMSB (as part of its obligation to pay the Deferred Sale Price) shall make periodic Profit Payments (as defined in item 2(j) below) to the Sukukholders. Upon maturity (unless earlier redeemed) or upon the declaration of an event of default, BMSB shall pay all amounts outstanding in respect of the Deferred Sale Price (subject to Rebate (Ibra’) (as set out in item 2(y)(viii) below), where applicable) of the relevant Sukuk Murabahah upon which the relevant Sukuk Murabahah will be cancelled.

2. PRINCIPAL TERMS AND CONDITIONS -(v) Events of default, dissolution event and enforcement event, where applicable :

 Events of Default are as follows:-

6. where any other indebtedness of the Issuer or any Third Party Security Provider becomes due and payable prior to its stated maturity or where the security created for any other indebtedness becomes enforceable, and if disputed by the Issuer or such Third Party Security Provider, such dispute has not been resolved within forty-five (45) days. No Event of Default will occur if the aggregate amount of the indebtedness above is less than Ringgit One Hundred and Fifty Million (RM150,000,000.00);





A Reurters report of the facility is provided below for reference:

Related: FINANCIALS

Malaysia's 1MDB to sell $729 mln sukuk for Bandar Malaysia relocation

(Corrects headline to million from billion.)
Feb 18 (Reuters) - Malaysian sovereign wealth fund 1Malaysia Development Bhd (1MDB) plans to sell 2.4 billion ringgit ($728.49 million) worth of Islamic bonds to finance the relocation of defence units from land marked for government development project Bandar Malaysia.
Bandar Malaysia Sdn Bhd, a unit of 1MDB Real Estate Sdn Bhd, said in a statement to the central bank on Tuesday that it will issue one- to 10-year sukuk by private placement to unnamed buyers.
AmInvestment Bank Bhd is advising on the sale of the sukuk, which will not be rated by credit-rating firms.
The funds raised will be spent on building bases for eight defence units including the police, air force and an artillery regiment.
Army pension fund Lembaga Tabung Angkatan Tentera won a 2.1 billion ringgit contract nearly a year ago to relocate the units from the Bandar Malaysia site.
Bandar Malaysia is a 196-hectare development in the capital city, Kuala Lumpur.
1MDB's last Islamic bond sale was in May 2009 when it sold 5 billion ringgit worth of 30-year bonds.
The sovereign wealth fund, chaired by Prime Minister Najib Razak, is also raising funds to pay off $6.5 billion in debt taken on to buy power plants and a joint venture with Abu Dhabi's Aabar Investments PJS.
Last month 1MDB said it plans to list the power plant assets this year in an initial public offering worth around $2 billion.
The $6.5 billion debt sale, managed by Goldman Sachs, was the subject of much negative publicity as few details were made public and as it involved huge fees for the U.S. bank, according to Thomson Reuters publication IFR. ($1 = 3.2945 Malaysian ringgit) (Reporting by Al-Zaquan Amer Hamzah and Yantoultra Ngui; Editing by Christopher Cushing)

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