Abu Dhabi gives new deadline as 1MDB misses $600 million payment

Abu Dhabi’s International Petroleum Investment Company (IPIC) has given 1Malaysia Development Berhad’s (1MDB) five days to make a $600 million payment.
Updated 08 August 2017
0

Abu Dhabi gives new deadline as 1MDB misses $600 million payment

HONG KONG: Abu Dhabi’s sovereign wealth fund has given 1Malaysia Development Berhad (1MDB) five days to make a $600 million payment, which the troubled Malaysian state fund failed to pay on Tuesday, further complicating a dispute hanging over Southeast Asia’s third-biggest economy.
The 1MDB fund said in a statement it was committed to meeting its obligations to Abu Dhabi’s International Petroleum Investment Company (IPIC), originally due on July 31, 2017, in August 2017. It did not specify a date in August.
It said all payments to IPIC would be made from the proceeds of the 1MDB rationalization plan, under which it is selling assets. It said the delay was also due to the need to get more “regulatory approvals.”
But Mubadala, which now owns IPIC, said in a separate statement on Tuesday that 1MDB and the Malaysian finance ministry (MoF) have just five days to resolve the non-payment.
“Under the Settlement, there is a five business day cure period for MOF Inc. and 1MDB to remedy their non-payment before MOF Inc. and 1MDB become subject to additional obligations to IPIC and Aabar,” Mubadala said.
Malaysia dissolved 1MDB’s advisory board last year, and its assets were either shifted to the government or sold off as part of the rationalization program, after the fund was linked to a multi-billion dollar global money laundering scandal.
One such asset sale — a $1.7 billion Bandar Malaysia property deal that was executed as part of the rationaliazation plan — collapsed in May. As part of the agreement with IPIC, 1MDB was to pay $1.2 billion in two installments. A second payment is due by the end of this year. 1MDB and Malaysia’s Ministry of Finance will also assume responsibility for all future interest and principal payments under two bonds worth $3.5 billion in total.
The agreement was reached after the Malaysian fund defaulted on its bonds in 2016, sparking a dispute with IPIC, which asked a London court to arbitrate a claim totalling some $6.5 billion.
IPIC was merged with Mubadala earlier this year.
Bonds linked to 1MDB remained largely unmoved on Tuesday.
1MDB’s 4.4 percent bonds due 2023 were trading slightly weaker at 91/93 while the bonds due 2022 were down half a point at 108.3/108.9 cents on the dollar.
“Despite the various guarantees and debt consolidation plans there is 1MDB debt outstanding, and the debt still presents a contagion risk to the government,” said Moody’s Analyst Christian de Guzman.
“We don’t have a clear picture of what the liability structure looks like but it is much smaller than the last publicly disclosed level of 4 percent of GDP in 2014,” he said.


Comcast challenges Disney for control of 21st Century Fox assets

Updated 48 min 44 sec ago
0

Comcast challenges Disney for control of 21st Century Fox assets

NEW YORK: A full-fledged bidding war for key assets of Rupert Murdoch’s 21st Century Fox erupted Wednesday as media and cable giant Comcast announced it plans an all-cash bid that would top an offer already on the table from Walt Disney Co.
Comcast said it is in “advanced stages of preparing” the offer for the television and entertainment assets Fox agreed to sell to Disney in a $52.4 billion stock deal announced in December.
Comcast, which owns the NBCUniversal media-entertainment group and is the largest US cable operator, said it was prepared to pay more than Disney for the operations, which don’t include Murdoch’s Fox News Channel, Fox Broadcasting and major sports channels.
“Any offer for Fox would be all-cash and at a premium to the value of the current all-share offer from Disney,” the Comcast statement said.
“The structure and terms of any offer by Comcast, including with respect to both the spin-off of ‘New Fox’ and the regulatory risk provisions and the related termination fee, would be at least as favorable to Fox shareholders as the Disney offer.”
Either deal would dramatically reshape the media-entertainment landscape and scale back the Fox empire created by the 87-year-old Murdoch.
Murdoch, who with his family controls 21st Century Fox, agreed to the tie-up in December that would give Disney the famed Fox studios in Hollywood along with Fox’s international TV operations and US cable entertainment and regional sports channels.
Included in the sale is Fox’s 39 percent stake in the British pay TV operator Sky. Murdoch has sought full control of Sky but has faced opposition from regulators in Britain.
Separately, Comcast last month made an offer of $30.7 billion in cash for Sky, in a move welcomed by the British firm.
Some reports said Murdoch had previously rejected an offer from Comcast. But the controlling family and shareholders would face pressure if the new offer is better than the one from Disney.
Fox had no immediate comment on the Comcast statement. But in its most recent earnings call, co-executive chairman Lachlan Murdoch said that “we are committed to our agreement with Disney” and that board members “are aware of their fiduciary duties on behalf of all shareholders.”
Analyst Richard Greenfield at BTIG Research predicted last month that Comcast would offer “a 25 percent premium to Disney’s bid” in an effort to win the deal.
“While a Comcast acquisition of Fox is surely challenging financially, Comcast has never shied away from a challenge,” the analyst wrote.
Either deal could face intense scrutiny from antitrust regulators because of the implications for the television and cinema sectors.
A tie-up with Disney would create giant a with up to 40 percent of US box office revenues, according to some estimates.
Comcast’s Universal studios is smaller than Disney’s but could vault to the top of the market by adding 20th Century Fox.
Either Comcast or Disney would gain global stature in the TV sector with Sky, the pan-European broadcaster with operations in Britain, Ireland, Germany, Austria and Spain. Comcast operates the NBC broadcast network while Disney owns ABC, and both have multiple cable channels.
The move comes with Murdoch gradually withdrawing from the empire he built, giving more authority to his sons Lachlan and James.
The group announced last week that Lachlan Murdoch would assume the role of chairman and chief executive at the “new” Fox, which would be tightly focused around the Fox News Channel and sports cable channels.
The consolidation in the sector comes with traditional operators facing pressure from online and tech platforms such as Netflix and Amazon, which are shaking up the model of pay TV deliver as well as the studio system for content production.
Another pending deal that would join telecom and broadband giant AT&T with media-entertainment group Time Warner is being challenged by the US Justice Department in an antitrust suit. A judge is expected to rule in that case next month.