By Chan Quan Min
Malaysia Airlines’ owner, investment fund Khazanah Nasional, has announced a RM1.38 billion exercise to de-list the loss-making airline from the stock exchange.
“Upon successful completion of the proposed selective capital reduction and repayment exercise, Khazanah will become the sole ordinary shareholder of MAS,” the state-owned fund said in a statement.
Khazanah currently owns a 69.37% equity stake in Malaysia Airlines or MAS and will need to purchase the shares it does not already own from the market.
Full ownership of MAS is important to Khazanah because it will “accord greater flexibility to execute a restructuring plan and put in place an appropriate capital structure in view of substantial funding requirements for the next few years.”
At a cash burn rate of about RM5 million per day, MAS will soon face financial constraints to sustain its operations and manage its high gearing ratio.
Minority shareholders will be offered 27 sen per MAS share, a 12.5% premium to the closing share price yesterday and, according to Khazanah, a 29.2% premium to the three-month average market price.
Khazanah is currently in discussions with regulators and government officials for a deep restructuring of the airline.
“Today’s proposal for de-listing represents the first stage of the restructuring scheme,” the sovereign fund said in today’s statement.
Talks to hash out the restructuring proposal are apparently in the “final stages” such that “detailed plans will be announced by the end of this month.”
According to Khazanah, the rationale for the de-listing exercise is the unfavourable financial performance of the flag carrier, which has recorded net losses for the past three financial years.
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