Sign up | Log in



Home  >>   Daily News  >>   Malaysia News  >>Companies  >> Privatisation critical for MAS' survival, says analyst
NEW UPDATES Asean Affairs  4 November 2014  

Privatisation critical for MAS' survival, says analyst

The proposed privatisation of ailing Malaysia Airlines (MAS) is critical for its survival and minority shareholders must accept the 27 sen per share offer to them at the forthcoming extraordinary general meeting (EGM), a research house analyst said Sunday.
Ahmad Maghfur Usman, Regional Transportation Analyst at RHB Research Institute, said: "Basically, MAS is right now going under water, and shareholders unable to recoup their investment. So, for the minority shareholders, it is better to take the 27 sen offer than being left empty handed.
"The saving grace for MAS at this point is privatisation and without it, the other option is to declare bankruptcy."
He was painting the scenario for minority shareholders ahead of the crucial Nov 6 EGM.
Ahmad Maghfur said if the EGM voted against privatisation, Khazanah Nasional Bhd which owns the majority stake in MAS, would not want to inject funds into it, making it tough for the airline then to restructure.
Khazanah had in August unveiled a radical 12-point restructuring plan costing RM6 billion to save MAS and RM1.4 billion would be paid out to minority shareholders, if they voted for the 27 sen offer.
It would also pave the way for the delisting of MAS from Bursa Malaysia.
"Going for bankruptcy is very challenging. This will also be the worst case scenario for the minority shareholders and will put pressure on the share price as such. MAS won't be trading at the same level.
"I would urge the minority shareholders therefore, to get their priorities right at the EGM," Ahmad Maghfur said.
He told Bernama that the 27-sen offer was an "attractive price", with all things considered, and the dire circumstances MAS has plunged into.
"It is an attractive offer. While not really much from where the share price is currently trading at, for the minority shareholders, it is an attractive exit offer," he said.
He said the privatisation of MAS would actually ensure a smooth transition for the restructuring, as well as insulate investors from being exposed to deeper losses.
"This is good reason why the minority shareholders need to take up the offer at hand," he added.
Delisting, Ahmad Maghfur said, was a necessary first step to restructuring, unlike the previous case of Petronas privatising the Malaysian International Shipping Corporation (MISC).
"MISC was a different landscape back then as it had successfully disposed of its container vessels division which was bleeding losses. The shipping industry was then at the bottom of its cycle and could only go up," he added, in recalling the 1990's move.
He said in the case of MAS, the situation was also totally the opposite as the airline is facing very aggressive competition.
He also contended that there is no basis for minority shareholders to demand more than the 27 sen offered.
"The outlook for MAS is still very challenging. Since the announcement on the restructuring, I haven't seen any meaningful change in terms of the game plan.
"MAS is still offering discounts and such and it will be an ugly scenario over the next two quarters in terms of earnings," Ahmad Maghfur highlighted
Given the intense competition in the industry, he said the minority shareholders should brace themselves for a very tough four to five years ahead without the restructuring, while expressing confidence that the majority of them would vote to accept the offer.
He said what was immediately crucial is for MAS to return to profitability, and in this light, he hailed the plan to cut the workforce by 30 per cent, though this would entail a RM1.2 billion compensation.
"For MAS, if it's able to trim the workforce by 30 per cent, you are looking at an annual saving of about RM700 million.
"On top of that and assuming this privatisation comes through successfully, the interest saving from the debt to equity conversion, would boost earnings as well," he added.
Ahmad Maghfur said for MAS employees, it was a difficult transition period with the possibility of losing their jobs, but Khazanah has been accommodative with its back-up plan for retrenched employees to be absorbed into other employment opportunities.
"This is good as they will be compensated quite reasonably. There is also potential for other job opportunities as well, and it does not have to be in the airline business," he added.

Reach Southeast Asia!
10- Nations, 560- Million Consumers
And $1 -Trillion Market
We are the Voice of Southeast Asia Media Kit
The only Media Dedicated to Southeast Asia Advertising Rates for Magazine
Online Ad Rates

Comment on this Article. Send them to

Letters that do not contain full contact information cannot be published.
Letters become the property of AseanAffairs and may be republished in any format.
They typically run 150 words or less and may be edited
submit your comment in the box below

Today's  Stories                            November 4, 2014 Subsribe Now !
• Central Bank: Thai economy slowly recovering Subcribe: Asean Affairs Global Magazine
• Campu Bank sees gains in first 9 months
• Privatisation critical for MAS' survival, says analyst
Research Reports
on Thailand 2007-2008

• Textiles and Garments Industry
• Coffee industry
• Leather and footwear industry
• Shrimp industry

• Singapore maps out plans to become first smart nation
• Foreign firms using illegal software
Asean Analysis                    October  31, 2014

• Asean Analysis October 31, 2014
The Case for Holding Cobra Gold 2015 in Thailand
Advertise Your Brand

Asean Stock Watch    November 3, 2014
• Asean Stock Watch-November 3 , 2014
The Biweekly Update
• The Biweekly Update  October 31, 2014

ASEAN NEWS UPDATES      Updated: 04 January 2011

 • Women Shariah scholars see gender gap closing
• Bank Indonesia may hold key rate as inflation hits 7 percent
• Bursa Malaysia to revamp business rules
• Private property prices hit new high in Singapore • Bangkok moves on mass transport
• Thai retailers are upbeat
• Rice exports likely to decline • Vietnamese PM projects 10-year socioeconomic plan


This year in Thailand-what next?

AseanAffairs   04 January 2011
By David Swartzentruber      

It is commonplace in journalism to write two types of articles at the transition point between the year that has passed and the New Year. As this writer qualifies as an “old hand” in observing Thailand with a track record dating back 14 years, it is time take a shot at what may unfold in Thailand in 2011.

The first issue that can’t be answered is the health of Thailand’s beloved King Bhumibol, who is now 83 years old. He is the world's longest reigning monarch, but elaborate birthday celebrations in December failed to mask concern over his health. More






1.  Verifier

1. Verifier

For security purposes, we ask that you enter the security code that is shown in the graphic. Please enter the code exactly as it is shown in the graphic.
Your Code
Enter Code

Home | About Us | Contact Us | Special Feature | Features | News | Magazine | Events | TV | Press Release | Advertise With us

| Terms of Use | Site Map | Privacy Policy  | DISCLAIMER |

Version 5.0
Copyright © 2006-2019 TIME INTERNATIONAL MANAGEMENT ENTERPRISES CO., LTD. All rights reserved.
Bangkok, Thailand