By Chan Quan Min
Khazanah Nasional’s offer to buy out minority shareholders of Malaysia Airlines at a 12.5% premium to the last traded price for the airline’s Bursa-traded shares is a worthwhile deal, bank analysts said.
“We view the selective capital repayment as a timely exit opportunity for minority investors, particularly as earnings momentum remains negative with an imminent cash call expected,” Tan Kee Hoong of AllianceDBS said in a note to clients this afternoon.
“Go for it, take the offer and say thank you,” Maybank aviation analyst Mohsin Aziz told his clients earlier in the day.
According to his calculations, the national airline is apparently worth RM4.1 billion or 25 sen a share on a sum-of-parts basis, two sen under the 27 sen per share being offered by Khazanah.
Mohsin Aziz
“As for hope for a revised upward offer? Don’t hold your breath,” Mohshin said.
“The company will release their second quarter (2Q14) results on Aug 19 (not yet confirmed) and the results will be awful, perhaps the worst in its history.
“When that happens, it will definitely spook everyone and evaporates any hope for a revised offer,” he warned.
The state investment fund this morning announced a RM1.38 billion corporate exercise to eventually de-list the loss-making airline from the stock exchange.
Khazanah currently owns a 69.37% equity stake in Malaysia Airlines and is seeking full ownership for “greater flexibility to execute a restructuring plan.”
It hopes that full ownership will also ease plans to “put in place an appropriate capital structure in view of substantial funding requirements for the next few years.”
To go through, the buyout exercise must get the approval of “at least 50% in number of minority shareholders and 75% in value of the minority shareholdings,” AllianceDBS noted.
Malaysia Airlines closed yesterday’s trading session on Bursa Malaysia at 24 sen a share. The counter has been suspended from trading today.
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