Malaysia tycoon Krishnan to help 1MDB repay $550 mln loan-sources

KUALA LUMPUR, Jan 30 (Reuters) - Malaysia's second-richest man, Ananda Krishnan, will lend 1MDB 2 billion ringgit ($550.96 million) to settle a loan to local banks, two people familiar with the matter said, helping pave the way for a $3 billion IPO by the state investor.

The people, who declined to be identified due to the sensitivity of the matter, said Krishnan was currently negotiating the terms of the loan with the state firm.

Earlier this month, Reuters reported that Krishnan was in talks with 1MDB to become a cornerstone investor in the long-delayed $3 billion listing of its power assets, which is likely to take place in the first half of this year.

"It is just a plain loan for now. We don't know for certain how this will translate into an equity stake in 1MDB's power unit," one of the people said.

1MDB officials declined to comment. Officials at Krishnan's investment vehicle Usaha Tegas were not immediately available to comment.

1MDB has already twice missed payments on the 2 billion ringgit bridge loan it took from local banks Malayan Banking Bhd (Maybank) and RHB Capital Bhd. That hit its bonds and fuelled broader investor concerns about Malaysia's economy.

The state investor, whose advisory board is chaired by Prime Minister Najib Razak, has been dogged by controversy over its nearly $12 billion debt pile, hundreds of millions of dollars of revenue earned by Goldman Sachs for handling its bond issues and a perceived lack of transparency.

The company this month hired Abu Dhabi-based Malaysian investment banker Arul Kanda as its new president, replacing Chief Executive Officer Mohd Hazem Abdul Rahman, who departed less than two years after his appointment amid criticism for leading the company into further debt.

1MDB has said it plans to use funds from the initial public offering of its energy assets to cut its debt and expand its business. ($1 = 3.6300 ringgit) (Reporting By Praveen Menon and Yantoultra Ngui; Editing by Miral Fahmy)