Malaysia Airline System Bhd (MAS) said today Khazanah Nasional will offer 27 sen for each share in the company it does not own, amounting to nearly 1.4 billion ringgit to take the troubled airline private.
According to Reuters , Khazanah, which owns 69.37 percent of MAS, will undertake a comprehensive review and restructuring of the airline, which has suffered two jetliner disasters this year, MAS said in a statement after announcing the suspension of its shares.
The move to delist MAS from the Malaysian stock exchange is due to the airline's unfavourable financial performance, having recorded a net loss for the past three years, it said.
Private ownership will allow room for Khazanah to introduce an appropriate capital structure for MAS to meet its "substantial funding requirements" in the next few years, and to sustain operations amid a high level of debt, the statement said.
Khazanah said it needs six to 12 months to restructure MAS.
It called for cooperation from all parties to undertake the restructuring, covering the airline's operations, business model, finances, staff and the regulatory environment.
"Nothing less will be required in order to revive our national airline to be profitable as a commercial entity, and to service its function as a critical national development entity," it said.
Reuters also quoted Christopher Wong, a senior investment manager at Aberdeen Asset Management Asia saying, "This is the sensible way forward given that massive surgery is required."
String of incidents seals fate
Earlier KiniBiz reported that MAS' shares were suspended from trading on the stock exchange as of this morning pending the announcement.
The national airline said the trading halt was “requested by Khazanah Nasional Bhd, being our major shareholder” and was made in preparation “for a proposal from Khazanah in relation to a material corporate exercise.”
Loss-making Malaysia Airlines (MAS) is expected to seek a delisting from Bursa Malaysia before going into a deep restructuring, Reuters reported yesterday.
Malaysia Airlines is in dire need for a restructuring after five long years deep in the red or barely breaking even.
“Our only option at this point of our business evolution is radical or sweeping change,” Malaysia Airlines CEO Ahmad Jauhari Yahya said in June.
Its fortunes took a further nosedive after one of its aircraft, Flight MH370, disappeared on March 8. The airline's problems deepened on July 17 when another jet, Flight MH17, was shot down over Ukraine, killing all 298 people on board.
The incident sped up efforts for the government to restructure the airline, sources told Reuters .
A delisting would pave the way for Khazanah, which is chaired by Prime Minister Najib Abdul Razak, to revive the loss-making airline, possibly by selling off its profitable engineering, airport services or budget airline units, trimming its payroll and installing a new management team.
In a statement, Najib said MAS is part of Malaysia’s history. It is a symbol of national pride, of our ambitions and our place in the world. It is more than just a company to us. So today we are making changes to ensure it is also part of Malaysia’s future
story.
Like all Malaysians, I am deeply saddened by the losses of MH370 and MH17. Seldom before has a company been subjected to two profound and extraordinary tragedies in such a short space of time. We pay tribute to the victims; we pray for their families; and, we thank all those around the world for their support and their prayers in these difficult times.
We hope these twin tragedies will change the way the aviation industry operates, making global travel safer for all. But we must also acknowledge that they will change the way MAS operates, too, he added.
