1MDB close to finalising sale of Bandar Malaysia, says report

KUALA LUMPUR (Dec 7): Debt laden 1Malaysia Development Bhd (1MDB) may soon be closing its final deal on the 60% stake of Bandar Malaysia’s project to remove its debt burden, according to a news report.

The Singapore's Straits Times reported that the China-backed consortium led by Malaysia's Iskandar Waterfront Holdings (IWH), which is controlled by the property tychoon Tan Sri Lim Kang Hoo, is the frontrunner for the stake of more than RM11 billion.

The report said the state investment firm is in the final stages of selling its 60% of the township project in Kuala Lumpur. The deal could be announced this week, coinciding with the annual Umno general assembly.

According to The Straits Times, a China-backed consortium led by IWH is learnt to be the front runner to take the controlling stake of Bandar Malaysia, which is valued at more than RM11 billion.

Located within 7km of Kuala Lumpur City Centre, the 197-hectare (486-acre) Bandar Malaysia will serve as Kuala Lumpur’s gateway for the high-speed rail (HSR) line to Singapore and become a central transport hub in the city via Mass Rapid Transit (MRT) lines 2 and 3, KTM Komuter, Express Rail Link (ERL) and future access to major highway networks.

IWH's partner in the proposed Bandar Malaysia deal is China Railway Engineering, which is eyeing a stake in the township for more than just its property play, a source close to IWH told The Strait Times.

"Gaining rights to build the terminal in Bandar Malaysia will give them a leg up in the HSR deal," said the source.

The Chinese firm is hoping to get ahead of the queue in bidding for the 340km line that will shorten the travelling time from Singapore to KL, to 90 minutes.

Around 150 companies and consortiums have responded to a request-for-information (RFI) for the S$14.9 billion (RM44.7 billion) HSR in an October market-sensing exercise by Singapore and Malaysia.

The respondents include firms based in Malaysia, Singapore, other parts of the Asia-Pacific region, Europe, the Middle East and North America, said Malaysia's Land Public Transport Commission and Singapore's Land Transport Authority.

IWH, a major property player  in Johor's Iskandar Malaysia development, is controlled by Lim and it owns over 1,600ha of land just across the Causeway from Singapore.

A 1MDB source told The Straits Times that Lim "is a front runner" as another bid was from state fund manager Permodalan Nasional (PNB) and the third had failed to materialise by Mr Arul's early November deadline.

Since selling a 1MDB asset to another government agency like PNB would be seen as a bailout, the China Railway-IWH proposal is the front runner.

In a media conference on Oct 31, 1MDB chief Arul Kanda Kandasamy said the Bandar Malaysia divestment would net at least RM11 billion for the finance ministry-owned company. He said three bidders were likely to submit "final binding and fully funded proposals" within seven to 10 days, but did not name the prospective buyers.

But according to the IWH source, the delay in naming the winner had agitated Lim, who was concerned after hearing that there might be a bid from Qatar players.

However, sources say there are still several hurdles to finalising the deal. For instance, 1MDB needs cash to pay down its loans, but Lim is said to prefer land swaps and other payments in kind. A fully funded Qatari bid would likely be a straight cash-for- equity purchase.

1MDB has been looking ways to reduce its debt pile, which stood at some RM42 billion at the end of March last year, based on its last available financial statements.

The state fund has in last month signed a deal to sell power plant unit Edra Global Energy Bhd (Edra) to China General Nuclear Power for RM17 billion. The deal is expected to complete in February.

Besides, 1MDB also has a RM16 billion debt-for-asset swap with an Abu Dhabi sovereign wealth fund, Abu Dhabi International Petroleum Investment Company (IPIC). -- theedgemarkets.com