We just couldn’t believe the level of absurdity 1MDB had subjected the people with its response to Tan Sri Muhyiddin Yassin just now.
The fact that they had the audacity in hoping that the people are dumb enough to believe them shows how desperate they have become.
Below is their response to Tan Sri Muhyiddin Yassin’s press release. Our comments in blue:
1MDB notes the press release issued yesterday by Tan Sri Muhyiddin Yassin. The characterisation of 1MDB as a “debt-laden company” is misleading, as Tan Sri Muhyiddin, a former Cabinet member, knows full well that the value of 1MDB’s assets exceeds its debt.
If people googled “1MDB debt-laden”, they will find numerous business articles about how 1MDB is swamped with debt which they are unable to settle on time. If you can’t even pay your finance costs totalling about RM2.4 billion per year, surely your ‘assets’ means nothing regardless if it exceeds your debt. The important thing is, the government had to fork out RM950 million in standby credit for you and you had to beg a foreign company to give another USD1 billion just to service your debts. Back in 2014, you even begged the banks to extend the payment deadlines a couple of times.
All this makes you debt-laden. It is you who tried to mislead the public by saying you are not debt-laden eventhough all evidence pointed out that you are. Your gearing is so high, your cashflow failed you. Please get a dictionary to know the meaning of ‘laden’.
This fact is reinforced by the significant value indicated by local and international investors for the ongoing sale of equity in Edra Energy and Bandar Malaysia.
The fact that you have to be broken up into separate entities and have to sell the assets you had heftily required just to alleviate your worsening financial situation reinforces the reality that you are indeed a debt-laden and problematic investment company.
As a Cabinet member when 1MDB was formed, Tan Sri Muhyiddin is fully aware of 1MDB’s capital structure. With RM1 million in equity from its shareholder, the Ministry of Finance, 1MDB raised capital on the markets – which is the debt on the company’s accounts. Many businesses, both in Malaysia and abroad, have used debt to successfully build their asset base. In 1MDB’s case, from RM 1 million equity, total group shareholder equity of RM1.7 billion was generated as of 31 March 2014.
Many businesses around the world are perplexed as to how a RM1 million company could haphazardly tried to amass RM42 billion worth of debts. That is like a person with just RM1 went on to borrow RM42,000. Indeed, being idealistic is an understatement. It is bordering lunacy. On top of that, you then could not service the interests. What you fail to tell the public is that by 31 March 2014 you incurred a loss of more than RM600 million. Can we know what is the loss for 31st March 2015? We can’t because you are repeatedly late in submitting your yearly audited accounts.
Notwithstanding the subsequent and ongoing challenges, which are well documented and acknowledged, 1MDB remains confident of generating surplus value as we progress with the rationalisation plan.
What good is an equity surplus when you can’t even service your debt? Experiencing repeated losses will eat up your equity eventually. Hence, you will not have enough cash to pay your debts and fund your operations. You were behaving irrationally in your business which in the end, as disaster looms, you need a debt rationalisation plan to undo your nonsensical business model. If the people did not make enough noise in 2015, you might trudge on and drag Malaysia into a financial abyss.
1MDB regrets that, despite repeated clarifications, certain current and former politicians continue to issue half-truths about the company. It is now clear that this is part of a deliberate and politically motivated attack, to sabotage not only our previously planned energy IPO but the ongoing implementation of our rationalisation plan.
The one that being political is 1MDB. Constantly behaving like a politician in trying to give misleading explanation, half-truths and covering up your mistakes. For instance, your IPO was planned to take off in 2014 but was delayed several times long before ‘certain current and former politicians’ had begun to criticise you. The failure to list Edra Energy was entirely your fault. You yourself sabotaged your business model with your own absurdity.
Despite this, 1MDB and our 100% ultimate shareholder, the Government of Malaysia, are fully committed to executing the plan, as presented to Cabinet on 29 May 2015.
Out of several points the former deputy prime minister had said about 1MDB in his press release, you are only harping about the word ‘debt-laden’. Even then you failed in trying to disprove it. But it is good you have recognised that your 100% owner is the Government of Malaysia thus, you are ultimately answerable to the people. The people can ask you questions or call your bluff. And what is more important is to know who was responsible for the financial fiasco that had costs taxpayers billions in standby credit and losses. In the end it is the people who had to bear the cost of this rationalisation plan. Therefore coming back to the accusation that the former deputy prime minister had been misleading; who is it now that was trying to mislead who? If only 1MDB had been honest in conveying the truth, accepting criticisms and their failures, and at least have an ounce of accountability towards the public, then we wouldn’t have this huge ‘trust deficit’.