Malaysian Airlines System Shares Suspended; to Be De-listed?
T he trading of shares of the parent company of Malaysia Airlines were halted earlier today due to the news that Khazanah Nasional Berhad — the strategic investment fund of the Government of Malaysia — had submitted a formal request to the Board of Directors of Malaysian Airline System Berhad.
Here is the press statement — which was released earlier today — in its entirety below:
Khazanah Proposes to De-list Malaysian Airline System Berhad
We are pleased to announce that Khazanah Nasional Berhad (“Khazanah”) has today submitted a formal request to the Board of Directors of Malaysian Airline System Berhad (“MAS”) to undertake a selective capital reduction and repayment exercise (“Proposed SCR”) of MAS’ ordinary shares. 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”). Upon successful completion of the Proposed SCR, Khazanah will become the sole ordinary shareholder of MAS, which would lead to a de-listing of MAS.
In June 2014, Khazanah had announced that it was in the midst of undertaking a comprehensive review of MAS, in consultation with the Special Shareholder, the Minister of Finance Incorporated. Khazanah further clarified that subject to the necessary approvals from the relevant authorities, it would announce the proposed restructuring scheme within a period of 6 to 12 months. 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. Nothing less will be required in order to revive our national airline to be profitable as a commercial entity and to serve its function as a critical national development entity.
In this regard, today’s proposal for de-listing represents the first stage of the restructuring scheme. Further, Khazanah is in the final stages of completing the overall restructuring proposal, and upon due process and approvals from the relevant authorities, regulators and the Special Shareholder, the Minister of Finance Incorporated, we envisage that additional detailed plans will be announced by the end of this month.
The official response from Malaysia Airlines is as follows:
We have received notice of Khazanah’s intentions to take full ownership and delist Malaysia Airlines. Our Board of Directors will be deliberating this proposal and an official response from the company will be issued later. During this period, our business operations remains unchanged.
We appreciate your patience and cooperation on this matter.
Malaysia Airlines has been in the news in recent months pertaining to two tragic events:
- A Boeing 777-200 aircraft — which operated as Malaysia Airlines flight 370 and was carrying 227 passengers and 12 members of the flight crew from Kuala Lumpur to Beijing — disappeared early in the morning on Saturday, March 8, 2014 somewhere over the Gulf of Thailand en route
- A Boeing 777-2H6ER aircraft which operated as Malaysia Airlines flight 17 and was carrying 298 people from Amsterdam to Kuala Lumpur had crashed in eastern Ukraine after been shot down by a missile
There were no survivors reported from either incident.
Frequent fliers have been wondering whether or not these two tragedies would eventually sound the proverbial death knell for Malaysia Airlines — but it appears that if this arrangement is finalized, Malaysia Airlines will survive.
What are your thoughts?