1Malaysia Development Bhd (1MDB) is now focused on solving current issues and executing the strategic review as outlined by its management and board, says Minister in the Prime Minister's Department, Datuk Seri Abdul Wahid Omar.

Prime Minister Datuk Seri Najib Tun Razak has directed that an audit be undertaken by the Auditor General and the report presented to the Public Accounts Committee.

"We will do the audit for past transactions. But, what is important is the need to be constructive, and to focus efforts on solving current issues, while looking at executing the strategic review," he told participants at a question and answer session at the Akademi Kepimpinan Kapten Hussein on Thursday in Kelana Jaya, Selangor.

Outlining the establishment of 1MDB, Wahid said the strategic development company, is a wholly-owned subsidiary of Ministry of Finance Incorporated with a paid-up capital of RM1 million.

The initial capital was to raise long term bonds and aided by a Government guarantee that could help lower the cost of funds.

"The hope was that the money could be invested into projects that generated high returns. So, that was the capital structure of 1MDB," he added.

He said over the years, 1MDB had expanded by way of borrowings from banks or capital markets, and had been buying many assets, including that of some Independent Power Producers (IPPs), thereby, pushing the debt level to RM42 billion as of March 31, 2014.

"The burden of servicing such a high debt is very (heavy) and difficult. So, until and unless your assets are able to generate (sufficient) cash flow, it is not sustainable.

"This is something the IMDB Board and Management have realised. Hence, they have undertaken a strategic review of the company's business model and capital structure and decided on three things.

"It includes, the decision to not incur any new debts or borrowings, unless it is to meet the current debt obligations or for refinancing.

"They have also agreed to not embark on any new projects or ventures and focus efforts on executing the Tun Razak Exchange and Bandar Malaysia developments. These are high value projects," he added.

He opined that IMDB's immediate move is to get the Initial Public Offering (IPO) of Edra Energy going.

"This IPO will benefit 1MDB in two ways, whereby, proceeds can be used to reduce debts and if the shareholding is reduced to below 50 per cent, all debts at the subsidiary level can be de-consolidated," said Wahid.

This, he added, will help reduce the company's overall gearing.