Malaysia Airlines confirms restructuring effective date, RM1.5b sukuk to be cancelled on March 29

(Photo by Mohd Suhaimi Mohamed Yusuf/The Edge)

(Photo by Mohd Suhaimi Mohamed Yusuf/The Edge)

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KUALA LUMPUR (March 23): Malaysia Airlines Bhd has confirmed that the company’s restructuring effective date occurred yesterday (March 22, 2021) and, accordingly, the group’s Islamic bonds or sukuk of up to RM1.5 billion will be cancelled next Monday (March 29, 2021).

CIMB Investment Bank Bhd, which is is the facilitator of the unrated perpetual sukuk Musharakah of up to RM1.5 billion, said yesterday the Islamic bonds under stock codes PZ160003 and PZ160004 will be cancelled next Monday.

"Please refer to the sukuk trustee for further details,” CIMB said in a filing yesterday on Bank Negara Malaysia’s (BNM) Fully Automated System for Issuing Tendering (FAST) website.

CIMB did not specify in the filing the name of the trustee for Malaysia Airlines' RM1.5 billion sukuk.

Malaysia’s sovereign wealth fund Khazanah Nasional Bhd owns Malaysia Airlines via Malaysia Aviation Group Bhd (MAGB).

In a statement on March 4, 2021 in conjunction with Khazanah's annual review 2021 event, Khazanah said the impact of the Covid-19 pandemic led to higher impairment of RM6 billion in 2020, particularly for aviation and hospitality assets, compared with RM4.9 billion in 2019.

Besides Malaysia Airlines, Khazanah's investees include Malaysia Airports Holdings Bhd (MAHB) and Themed Attractions Resorts & Hotels (TAR&H), which were not spared when various measures to curb the spread of the Covid-19 pandemic resulted in the tourism, hospitality and aviation sectors taking a considerable hit, according to Khazanah.

Khazanah said it had to impair several assets, namely RM3.1 billion for Malaysia Airlines parent MAGB and RM1.8 billion for TAR&H to account for these effects.

"As the sole shareholder of MAGB, Khazanah continues to provide full support and close cooperation in comprehensive efforts to ensure the national carrier's sustainability post pandemic. On Feb 22, 2021, the High Court of Justice of England and Wales sanctioned a scheme of agreement between MAGB's leasing entity MAB Leasing Ltd and the majority of MAGB's aircraft operating lessors, following unanimous support from the lessors.

"This represents an important component of the wider restructuring exercise, which will achieve a reduction in MAGB's liabilities of over RM15 billion. Moving forward, MAGB will focus on working closely with the government and stakeholders on restarting air travel and promoting industry recovery, as well as continuing cash conservation while capturing demand recovery as part of its internal restructuring," Khazanah said.

Quoting Khazanah, The Edge Malaysia weekly in its March 15 to 21, 2021 issue reported that MAGB's near-term focus will be on executing its Long-Term Business Plan 2.0, which does not call for a merger or any similar strategic option at this juncture.

“Having said that, strategic partnership options can be evaluated when the industry recovers,” Khazanah said in an email response to questions from The Edge.

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