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TMCNet:  MAS to be restructured [New Straits Time (Malaysia)]

[August 10, 2014]

MAS to be restructured [New Straits Time (Malaysia)]

(New Straits Time (Malaysia) Via Acquire Media NewsEdge) KUALA LUMPUR: A DETAILED plan to restructure ailing national carrier Malaysian Airline System Bhd (MAS) is expected to be announced by end of this month, its largest shareholder, Khazanah Nasional Bhd, said after making a formal offer to buy out the airline's equity from other shareholders yesterday.


Khazanah, the government's strategic investment arm, will later delist MAS from Bursa Malaysia and proceed with its restructuring plan. Trading in MAS shares was halted pending Khazanah's announcement yesterday with resumption of quotation expected on Monday.

In a statement yesterday, Prime Minister Datuk Seri Najib Razak said Khazanah's buyout and the delisting was the first step needed to return MAS to profitability.

"It is a step I wholeheartedly support." Najib said MAS was part of Malaysia's history and a symbol of the nation's pride, ambitions and 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." Analysts said the delisting would provide MAS some breathing space to focus on turning the company around. As a listed entity, it had its hands full in having to comply with public disclosure rules of the stock exchange while having to handle public criticism over its poor performance. The latest tragedies involving two of its jetliners added to MAS' troubles.

Najib paid tribute to victims of the twin tragedies, saying apart from hoping the incidents would change the way the aviation industry operated, it would also change the way MAS did business.

He said half-hearted changes would not save MAS and that only an overhaul of the company would ensure its success.

"Piecemeal changes will not work," he said.

"This process of renewal will involve painful steps and sacrifices from all parties. My instruction and my commitment to all concerned parties is that the process will be carried out professionally, with proper principles of fairness, transparency and compassion." Najib called on all parties with interest in the airline, including management, employees, unions, creditors, passengers and Malaysians, to close ranks and work together.

In an earlier statement, Khazanah, which owns 69.4 per cent of the airline, said delisting was the first stage of a wider restructuring scheme. Apart from Khazanah, the government also owns a golden share in MAS through Minister of Finance Inc.

Under the buyout plan it proposed yesterday, Khazanah is offering to pay minority ordinary shareholders RM0.27 per ordinary share for the stock in 30 per cent stake it does not own. The price is a 12.5 per cent premium to the closing price of RM0.24 on Thursday. At the price offered, Khazanah will have to fork out some RM1.4 billion.

In a statement, MAS said its board would deliberate on Khazanah's proposal and a response would be issued later. It added that during this period, the airline would operate as usual. Delisting is not uncommon and does not mean an end to a corporation.

Other large Malaysian corporations had opted for a similar move while reorganising their operations, with some returning to the stock market stronger than ever. They include national carmaker Proton Holdings Bhd, IOI Properties, Boustead Plantations, Malakoff Power, Astro and telecommunications giant Maxis.

(c) 2014 ProQuest Information and Learning Company; All Rights Reserved.

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