Friday, April 29, 2016

1MDB IPIC BOND DEFAULT PRESS SPAT AND THE HALF PAST SIX CEO LAWYER

Press headlines over here, MalayMailonline "1MDB says in ‘limited’ default after IPIC fails to make bondpayment" and StarOnline "1MDB: Limited cross defaults after IPIC fails to make bondpayments
Press headline over there, "1MDB defaults on bond after missing $50m payment amid Ipic dispute"

See the difference?

Over here, IPIC has defaulted. Over there 1MDB is the defaulter.

Definition of Obligor:
A person or entity who is legally, or contractually, obliged to provide some benefit or payment to another. In the financial context, the term obligor refers to a bond issuer, who is contractually bound to make all principal repayments and interest payments on outstanding debt. The recipient of the benefit or payment is known as the obligee.

Definition of Guarantor:
A guarantor is a person who guarantees to pay for someone else's debt if he or she should default on a loan obligation. A guarantor acts as a co-signor of sorts, in that they pledge their own assets or services if a situation arises in which the original debtor cannot perform their obligations.

So there and here we are, in matters of the press spat.

Which brings us to the half past six lawyer.

With the definitions above a layman can easily understand what it means. Any qualified lawyer worth his salt would and must understand the same.

1MDB CEO and qualified lawyer, Arul Kanda, has said so himself, from this Reuters report,
"The guarantee is clear and there is no dispute - IPIC said they will pay under the guarantee and 1MDB as the borrower is the primary obligor," said Arul. 
While a layman may understand the definitions above, "obligor" is not a commonly used word.
But this half past six lawyer is quoted to have said it himself. Surely and admittedly, he must at the very least been aware and knows 1MDB is primarily obligated to make the interest payment.
I won't even bother to provide the definition of "primary".
And by the way Mr Arul, your "curveball" in Bloomberg or anywhere else in the whole wide world, is NEVER ever from left field.

Thursday, April 28, 2016

1MDB MAY OR MAY NOT COUPON PAYMENT

Bloomberg says "1MDB Bondholders Face Threat of More Tussles Ahead of May Coupon"

Another USD 52.4 million interest is due for payment come 11 May in the next few days.

1MDB could use a Groupon despite having cash surplus of RM 2.3 billion
in the  kitty.

Remember, in order to resolve matters , 1MBD may have to fork out USD 1.15 billion to IPIC which was due 31 December 2015 and was not paid.

This became the subject and cause for the last interest payment default. 

Wednesday, April 27, 2016

1MDB IPIC EPIC POKER GAME

In this unfolding game of wits or of will if you like, I wrote that the one who blinks first will make the interest payment.

As it turned out it became sort of an intermission.

IPIC has expressedly stated that it will honour all obligations as guarantor for the USD3.5 billion bond issue only after 1MDB had confirmed being in default. 

IPIC also stated that a default by 1MBD will not cause a cross default for it's own bonds.

This is strengthened by a Bloomberg report that supports IPIC's claim and the 1MDB default has had little impact on IPIC's integrity and bond issues.

I also wrote that there is another USD52,412,000 interest due from1MDB  next month and this is confirmed by the 1MDB CEO Arul Kanda.

The due date for the interest payment is 11 May.

Will this 1MDB IPIC dispute end up in the courts?  It looks that way. 

More drama in the next few days, all in.


Tuesday, April 26, 2016

1MDB IPIC SCRAP - ANOTHER DEFAULT NEXT MONTH?

1MDB has confirmed that the interest due was not paid and admitted being in default.

A report in the Edgemarket noted that the interest, in relation to the present disputed payment, for a USD1.75 billion bond tranche is semi-annual.

The IPIC's unaudited accounts 2015 has in note 22 stated that it had made interest payments of USD50,312,000 and USD52,412,000 on 16 October and 10 November 2015 respectively.

Which could mean that there will be another USD52,412,000 interest due, for the other USD1.75 billion bond tranche,
sometime next month.

If so and going by the latest actions of the disputing parties, will this interest due also be subjected to a default?

1MDB IPIC BOND DEFAULT D-DAY

The dateline to pay interest ended today at 12am London time or 8am in Malaysia.

IPIC in a filing  with the London Stock Exchange said it would honour the interest payment as guarantors of two tranches of bonds totalling USD 3.5 billion.

But only after (or if) 1MDB is in default.

Was it paid?

Monday, April 25, 2016

1MDB IPIC DEFAULT DRAMA


Upcoming Interest Payments under certain 1MDB Notes
·          IPIC will make the U.S.$ 50,312,500.00 interest payment to holders of the Notes issued by 1MDB Energy (Langat) Limited and guaranteed by 1MDB, but only after 1MDB defaults on its payment obligations in respect of such Notes
·           A 1MDB default does not cross-default IPIC

IPIC's London Stock Exchange release.

Saturday, April 23, 2016

1MDB IPIC HIGH STAKES POKER GAME

It's a very, very high stakes poker game between IPIC, a company listed on the London Stock Exchange, and 1MDB.

Both are backed by their respective Governments of UAE and Malaysia.

Reuters reports "1MDB boss says the Malaysian fund and IPIC face cross default".

Between the two feuding corporate entities, IPIC, being a public listed entity, would be more than aware the ramifications the default will have on the Company and its parent the UAE government.

In this duel and battle of wits, without a negotiated solution, the one who blinks first will be the one that will make the interest payment.
"On its website this week, 1MDB's president said the fund expects bondholders will be paid. Some ratings firms say IPIC will likely fulfill its role as guarantor and pay the interest, if called upon by the bond's trustee" - Nasdaq

Monday, April 18, 2016

EPIC IPIC 1MDB FEUD - TRUTH OR DARE?

IPIC's Statement to London Stock Exchange detailing 1MDB noncompliance to "Binding Sheet".

1MDB's reply in their press release, among others,
"Consequently, as of the time of this statement, the Issuer understands IPIC has not paid the interest."
Look's as though it's headed for the courts unless matters are resolved.

The ramifications are indeed serious in this article by AsiaOne Business.

The interest due has to be paid but by whom?

Will the courts of London or Kuala Lumpur decide should the dispute become a legal recourse?


Friday, April 15, 2016

IMDB's 1MDB Hollywood Treatment


When there's a buck to be made, in Hollywood parlance, there's no business like show business...

1MDB's debut on the big screen in a documentary by Oscar-nominated filmmaker Mike Lerner,  is getting wide media coverage in major entertainment portals such as popular movie website IMDB.

Vanity Fair started the ball rolling saying it's thematicaly appropriate.

Gets glamorous on Maxim.

The Hollywood Reporter has this article which ended with, quote,
"Red Granite has maintained that there is nothing inappropriate about any of the business activities of Red Granite Pictures or Riza Aziz, and that the company is responding to all inquiries and cooperating fully."
...and as they also say, the show must go on.

Monday, April 11, 2016

UAE's IPIC denies links with BVI-incorporated firm linked to Malaysia's 1MDB-Reuters

Reuters reports, "Both IPIC and Aabar confirm that Aabar BVI was not an entity within either corporate group"

Statement to London Stock Exchange here.

Friday, April 8, 2016

1MDB IPIC Debt Settlement Agreement

The PAC has finally tabled its report to the Dewan Rakyat yesterday 7 April.

When all is altogether finally said and done, there is this other matter of the 'Debt Settlement Agreement' between 1MDB and IPIC,  the  International Petroleum Investment Company, a company listed on the London Stock Exchange.  


1MDB president and executive director, Arul Kanda, has been reported by Bloomberg in an interview, to be leaving 1MDB and we will come back to him later.


The pertinent subject at hand is this  'Debt Settlement Agreement' signed last year, 28 May 2015.


A report on this agreement was published by The National, UAE headlined "Abu Dhabi’s Ipic to pay interest on 1MDB bonds as Malaysia clears officials", 8 October 2015.


It reported the following, 

"Ipic agreed in May to grant 1MDB $1bn in cash to settle some debt, assume $3.5bn of debt and forgive an undisclosed sum of debt owed to Ipic by 1MDB, in return for a transfer of assets to Ipic."
This is corroborated, as quoted in The National report above verbatim, in the unaudited accounts of IPIC for the financial year ending  2015, screenshot below.



The relevant statement in the Note is thus, "by 30 June 2016, IPIC is to have received a transfer of assets with an aggregate value of an amount which represents the sum of the Cash Payment, the Assumption of Debt and the Debt Forgiveness".

Reading the Note, I take that to mean Cash Payment of USD 1 billion, Assumption of Debt of USD 3.5 billion. Debt Forgiveness may refer to USD 431,326,000.00 (amount outstanding, I stand corrected and it could be more). 

The total for only the Cash Payment and Assumption of debt amounts to close to USD 5 billion or  RM 19,600,000,000.00 (1 USD = RM 3.92)

Interestingly, the Bloomberg report above, quoted Arul Kanda as saying, 
"From my perspective, I’m done,” said Kanda, a trained lawyer. “Everything’s signed. Legal agreements are there, they’re binding. I’m leaving the company" with available funds, he said.
The question arises, has 1MDB already transferred the assets to IPIC - signed, sealed and delivered as Arul Kanda mentions?  

Assets, cash or in kind totaling RM 19.6 billion?

If anyone hadn't notice, the time frame, to deliver the assets is - 30 June 2016, barely 3 months ahead.

To be read in conjunction with 1MDB press release "1MDB-IPIC Debt Settlement Arrangements"













Petroleum Investmen