Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah (standing fourth from left) with Deputy Finance Minister Datuk Johari Abdul Ghani (standing second from left) witnessing (seat from left) Board of Directors of 1MDB chairman Tan Sri Lodin Wok Kamaruddin, Iskandar Waterfront Holdings director Abdul Razak Yusoff and China Railway Engineering Corporation (M) Sdn Bhd managing director Cai Zemin signing the document during Bandar Malaysia Signing Ceremony at The Royale Chulan Hotel recently. Pix by Asyraf Hamzah

KUALA LUMPUR: 1Malaysia Development Bhd (1MDB) today clarified that its RM7.41 billion Bandar Malaysia land sale agreement with Iskandar Waterfront Holdings Bhd (IWH) and China Railway Engineering Engineering Corp (CREC) does not refer to the land sale valuation, but instead to the estimated share of the net equity value of the Bandar Malaysia project.

In a statement today, the company noted that certain quarters had attacked the RM7.41 billion land sale valuation contained in a recent announcement on the successful share sale and purchase agreement executed with the IWH-CREC Consortium for 1MDB to sell 60 per cent of the equity in the Bandar Malaysia project.

“These appear to be last ditch attempts by members of the opposition to undermine the company's rationalisation process

“The valuation contained in the announcement made by CREC to HKEx (Hong Kong Exchange and Clearings Ltd) refers not to the land sale valuation, but instead to their estimated share of the net equity value of the Bandar Malaysia project, based on certain assumptions, which are subject to further negotiations during the completion period between January and June 2016.

"The starting point of any net equity value calculation, is the land sale valuation of RM12.35 billion, of which the consortium’s 60 per cent share equates to RM7.41 billion. This is the basis upon which the 10 per cent deposit of RM741 million has been calculated and agreed upon by all parties,” said the company.

1MDB said that during the completion period, adjustments may be made to the RM7.41 billion land sale valuation, depending on whether or not certain Bandar Malaysia related liabilities can be passed to the consortium such as the remainder contract costs for relocation of the existing facilities and the Bandar Malaysia sukuk debt.

The agreement executed between the parties on 31 December 2015, it said provides for a robust and objective mechanism to determine, among others, these matters, which all parties have committed to.

“1MDB is focused now on taking the necessary steps and to procure the relevant consents in order to implement the legally binding agreements executed in 2015 for the sale of Edra, the debt for asset swap with IPIC International Petroleum Investment Company) and the sale of 60 per cent equity in the Bandar Malaysia project. We intend to issue further updates on this in due course.”