Malaysia Airlines to redeem RM1.5b sukuk early

Photo by Suhaimi Yusuf/The Edge

Photo by Suhaimi Yusuf/The Edge

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KUALA LUMPUR (Feb 11): Malaysia Airlines Bhd, which is in the midst of negotiating with its creditors including aircraft lessors to restructure its whopping debts, is redeeming its RM1.5 billion sukuk musharakah early, after previously deferring repayment by six months.

According to a filing by CIMB Investment Bank on Bank Negara Malaysia's Fully Automated System for Issuing and or Tendering, the national carrier intends to redeem the issuance in whole.

"Please be informed that the issuer intends to early redeem the sukuk musharakah (in whole). Please refer to the sukuk trustee for further details of the special resolutions," the filing said.

In September last year, the airline announced the postponement of bond payments amid the economic impact of the Covid-19 pandemic.

It said there would be no payment for the distribution periods of between March 29 and Sept 30, 2019; Sept 30, 2019 and March 31, 2020; and from March 31, 2020 to Sept 30, 2020.

Malaysia Airlines had issued notices of deferral dated Sept 17, 2020 to its bondholders, ahead of its periodic distribution date of Sept 30, 2020 and said the distribution date would be deferred to March 31, 2021.

The airline issued the sukuk to raise funds for working capital and general investment, among others.

Malaysia Airlines is taking aircraft operating lessors to the UK Court to approve the proposed debt restructuring scheme. For other classes of creditors, it is seeking to reach an agreement with them bilaterally.

Other creditors include aircraft original equipment manufacturers such as Boeing and Airbus, revolving credit facility and hedging contract providers such as lenders, and government-related entities like Turus Pesawat Sdn Bhd, Assets Global Network Sdn Bhd and Kumpulan Wang Persaraan (Diperbadankan).

Malaysia Airlines has remained financially ailing for more than two decades since the Asia Financial Crisis in 1998. The RM6 billion bailout and privatisation exercise by its sole shareholder Khazanah Nasional Bhd in 2014 have yet to yield any desired results so far. The Covid-19 pandemic that has curbed cross-border travelling worldwide has been another hard hit to the national carrier.

As part of the national carrier's latest restructuring deal, Khazanah has committed to injecting fresh capital to recapitalise the airline.

Kathy Fong