Malaysia Airlines to be delisted after €320m offer
Published 09/08/2014 | 02:30
Malaysia Airlines will be delisted after sovereign wealth fund Khazanah Nasional offered to buy out minority shareholders in a restructuring plan for the national carrier that suffered two disasters this year.
Khazanah will pay 27 sen a share for a total of 1.38bn ringgit (€320m) to buy the remaining 30.6pc it doesn't own. The airline will need "substantial funding requirements" for the next few years to sustain operations, the company said.
Malaysian Prime Minister Najib Razak said the revamp will involve "painful steps and sacrifices". The carrier is struggling to stem losses and repair its image after the downing of Flight 17 in Ukraine last month compounded woes from the disappearance of a jet in March.
Malaysia Airlines has grappled with increased competition and higher costs even before Flight 370 vanished, as low-cost rivals flooded the region with planes and drove down fares.
"By privatising it first, it makes the restructuring easier," said Jason Chong of Manulife Asset Management Services. "If you leave it as a public-listed company, there's a lot more regulatory requirements that you have to adhere to."
Malaysia Airlines shares had dropped 23pc this year prior to the request for a suspension. The carrier's board will discuss the proposal and business operations remain unchanged, it said in a statement.
The company missed its target to be profitable last year as rising prices for fuel, maintenance and financing wiped out revenue gains. In May, it pointed to an unfavorable foreign exchange rate environment as an additional challenge this year.
"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," Khazanah said.