KUALA LUMPUR: The High Court here today heard that the 1Malaysia Development Berhad (1MDB) intended to use the proceeds from its Initial Public Offering (IPO) to pay off its existing bank loans and debts.

Former chief executive officer of 1MDB, Mohd Hazem Abd Rahman, 49, agreed to a suggestion by Datuk Seri Najib Tun Razak's lawyer, Tania Scivetti that 1MDB acquired two energy assets in order to enhance its interest in the energy sector and ultimately to be listed on the Malaysian stock exchange.

The two energy companies in question are Tanjong Energy Holdings Sdn Bhd and Mastika Lagenda Sdn Bhd.

The 10th prosecution witness was testifying during cross-examination by Scivetti at the former premier's trial involving misappropriation of RM2.3 billion from 1MDB funds.

Referring to the Public Accounts Committee (PAC) report on Governance Management Control of 1MDB, Scivetti questioned the witness whether he really said the proceeds from the IPO would be used to pay the 1MBD bank loans and fully repay the group's debts, to which he agreed.

Scivetti: Do you agree that the idea of launching the IPO would be in the interest of 1MDB considering the raising of funds would help settle the existing loans and bring cash flow to 1MDB?

Mohd Hazem: Yes.

The witness also answered in the affirmative to a question that the long-term rationale for the acquisition of Tanjong Energy and Mastika Lagenda was ultimately to package these two energy assets into one company and then for IPO on the stock exchange.

He also said "yes" when asked whether 1MDB Energy Holdings Ltd was the company earmarked for the IPO.

Scivetti: Would you agree considering the financial liability that 1MBD was facing in 2014, you said during the 1MDB board of directors meeting on March 26, 2014, that the listing (IPO) would have generated RM15 to 25 billion in revenue?

Mohd Hazem: I am not sure about the numbers.

The witness also agreed to a suggestion by Scivetti that 1MDB being listed on the stock market would be a good expansion for the company.

Najib is facing four charges of using his position to obtain bribes totalling RM2.3 billion from 1MDB funds and 21 charges of money laundering involving the same amount.

The trial before Justice Collin Lawrence Sequerah continues on Monday.

-- BERNAMA