Malaysia Airlines (MH, Kuala Lumpur International) majority shareholder, Khazanah Nasional, has announced it will acquire all remaining equity in the carrier as part of plans to privatize and then restructure the struggling airline.
In an announcement to the local stock market, Khazanah, which owns 69.37% in Malaysia Airlines, said its Selective Capital Reduction (SCR) and repayment exercise will see MYR0.27 (USD0.08) being offered per ordinary share pointing to a total offer of MYR1.4billion (USD435.1million) for the remaining 30.63% in outstanding stock.
"The proposal will enable minority ordinary shareholders of MAS to receive a capital repayment amount of RM0.27 per ordinary share. This represents a 12.5% premium to closing price on 7 August 2014 and a 29.2% premium to the 3-month volume weighted average market price (“VWAMP”)," the Malaysian sovereign wealth fund said.
The exercise accomplished, Khazanah will then de-list Malaysia Airlines before proceeding with its restructuring plan, expected to take six to 12 months after it has secured approval from shareholders. Khazanah says the privatization will accord it "greater flexibility to execute a restructuring plan" while allowing it to support Malaysia Airlines with adequate capital in order to meet its "substantial funding requirements" in the next few years.
"We reiterate that the proposed restructuring will critically require all parties to work closely together to undertake what will be a complete overhaul of the national carrier on all relevant aspects of, inter alia, the airline’s operations, business model, finances, human capital and regulatory environment," it said.
The privatization will also allow Khazanah to push through tough staff downsizing plans which have hindered past restructuring attempts.
Malaysia Airlines has suffered serious financial losses over the course of its most recent financial year compounded by the loss of two B777-200(ER) hulls - 9M-MRO (msn 28420) and 9M-MRD (msn 28411) - due to suspected foul-play.
