KUALA LUMPUR: Top management at both Malaysian Airline System Bhd (MAS) and Khazanah Nasional Bhd expressed relief at the outcome of the airline’s extraordinary general meeting (EGM) yesterday, which saw its minority shareholders giving consent to the country’s state investment arm to proceed with its RM6 billion rescue plan for the beleaguered national carrier.
Of the total votes cast at the meeting, 93.98% (1.13 billion votes) voted for Khazanah’s proposed selective capital reduction (SCR) and repayment exercise of MAS, while 6% (72 million votes) voted against it.
“It’s a big relief because before this, we could not be too presumptive of things,” MAS chairman Tan Sri Md Nor Yusof told reporters after the EGM that lasted nearly three hours. Earlier at the packed meeting, Md Nor was among the senior executives and directors who faced criticism from MAS’ minority shareholders for their “poor management” of the loss-making airline.
On the new group chief executive officer (CEO) of MAS who will take over from Ahmad Jauhari Yahya, whose contract has been extended to September next year, Md Nor said the airline is still in search of a candidate for the position.
Khazanah, the majority shareholder of MAS with a 69.37% stake, had on Aug 29 proposed to buy out MAS shares it does not own at 27 sen each and take the loss-making airline private.
It revealed a 12-point plan for MAS, which includes measures to enable MAS to achieve sustained profitability within three years of delisting, that is, by end-2017. It also sees Khazanah pumping RM6 billion into MAS and a 30% reduction or 6,000 workers from the airline’s current workforce of 20,000.
On when it will initiate the job cuts in MAS, Md Nor declined to say, except that it now has obtained a clear mandate to do so.
On Jentayu Danaraksa Sdn Bhd’s alternative proposal to Khazanah’s 12-point plan, which will avert the need to lay off a substantial number of the planned 6,000 MAS workers, Md Nor said: “We heard, and we are interested to find out more about it.”
The Edge Financial Daily yesterday reported that the MAS Employees’ Union had given its backing to the alternative proposal by Jentayu Danaraksa, a newly set-up financial advisory firm headed by former MAS managing director and CEO Tan Sri Abdul Aziz Abdul Rahman.
In a statement yesterday, Khazanah said the proposed SCR is targeted to be completed next month.
“Upon completion, Khazanah will become the sole ordinary shareholder of MAS. Thereafter, Khazanah will proceed with the delisting of MAS from the Main Market of Bursa Malaysia,” it added.
Meanwhile, fears about the impending decision from shareholders at yesterday’s EGM resulted in panic selling in MAS shares in early trading, sending its share price to as low as 18.5 sen, with over 400 million shares transacted as at 4pm.
During the EGM, several shareholders accused the airline’s advisers of giving bad advice to the board and said they should be questioned. Other shareholders questioned the effectiveness of Khazanah’s 12-point plan to revive MAS and sustain its profitability after four failed plans in the past.
However, MAS’ share price recovered following the results of the voting to end the day up 1.92% to 26.5 sen, with 781.29 million shares done. Its market capitalisation stood at RM4.43 billion. MAS was the top most active counter yesterday.
“Today’s (yesterday’s) decision by minority shareholders in support of the proposed SCR is premised on the view that the offer price is fair and reasonable as stated by the independent adviser, AmInvestment Bank Bhd, in its independent advice letter dated Oct 15, 2014, as well as the recommendation of the independent directors of MAS to vote in favour of the proposed SCR,” said Ahmad Jauhari in a separate statement.
“Our shareholders’ approval represents a first but major hurdle crossed, and there is much more to be done. We hope to complete the SCR process before the end of the year.
“In the meantime, there will be no interruption to MAS operations. The company will continue to fly, honour existing reservations and plan future travel,” he added.
This article first appeared in The Edge Financial Daily, on November 7, 2014.