25 Apr 2016 08:51
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
On 10 June 2015, IPIC GMTN Limited issued an announcement (RNS Number 7064P) relating to a binding term sheet dated 28 May 2015 (the Binding Term Sheet) and other ancillary documents entered into between International Petroleum Investment Company PJSC (IPIC), Aabar Investments PJS (Aabar), Minister of Finance, Inc., Malaysia (MoF) and 1Malaysia Development Berhad (1MDB). Amongst other things, the Binding Term Sheet provided for IPIC assuming the obligations to pay (on an interim basis) interest due under two IPIC guaranteed 1MDB financings amounting to U.S.$3.5 billion in aggregate principal amount, including U.S.$1,750,000,000 fixed rate 5.75 per cent. notes due 2022 issued by 1MDB Energy (Langat) Limited and guaranteed by 1MDB (the Notes).
IPIC's guarantee of the Notes (the Guarantee) provides that IPIC's payment obligations in respect of the Notes are subject to certain conditions, including the occurrence of a 1MDB Event. 1MDB Events, in turn, include a default by 1MDB for more than five business days in the payment on the due date of interest or principal payable in respect of the Notes (1MDB Default). The Guarantee also prescribes the number of days following such 1MDB Default within which IPIC must fulfil its payment obligations in respect of the Notes. A 1MDB Default does not cross-default IPIC.
In respect of the Notes, IPIC notes that an interest payment of U.S$ 50,312,500.00 was due on 18 April 2016. IPIC understands that neither 1MDB Energy (Langat) Limited nor 1MDB have made this payment. Should 1MDB Energy (Langat) Limited and 1MDB fail to make such payment on or before 25 April 2016, a 1MDB Default shall occur.
As at the time of this announcement, IPIC is not aware of the Guarantee being called upon. IPIC has always honoured its obligations arising from any agreements it has entered in to and will continue to do so. Accordingly, if a 1MDB Default occurs and IPIC is called upon in accordance with the procedure prescribed in the Guarantee, IPIC will honour its obligations in relation to this interest payment, which shall be met out of IPIC's existing liquidity.
IPIC notes that the status of the Binding Term Sheet continues to be as disclosed in the announcement issued by IPIC GMTN Limited on 18 April 2016 (RNS Number 4672V). 1MDB and MoF are in default pursuant to the terms of the Binding Term Sheet and IPIC's and Aabar's obligations under the Binding Term Sheet have terminated. Any payment in respect of the Notes would be made by IPIC in respect of its obligations under the Guarantee and not in any capacity under the terms of the Binding Term Sheet. IPIC notes that it is entitled to the benefit of indemnities from 1MDB and MoF in respect of all amounts that it may be required to pay in respect of the Notes and the Guarantee under the terms of the Binding Term Sheet and these indemnities survive the termination of the Binding Term Sheet.
IPIC reserves all its rights under the above documents and in respect of the various options for settlement.