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Malaysia Airline's shares rise on takeover offer

08/11/2014 | Reuters

Shares of Malaysia Airline System (MAS) rose as much as 10.4 percent on Monday after state fund Khazanah Nasional said it will offer 27 sen for each share in the company it does not own, amounting to nearly 1.4 billion ringgit ($435 million) to take the troubled airline private.

MAS shares were trading at 26 sen per share at 0119 GMT, 8.3 percent higher than the 24 sen when the stock was suspended on Friday. Its shares topped the most active list on the Malaysian bourse.

The move by Khazanah, which owns 69.37 percent of MAS, follows a difficult period for the airline since the disappearance of Flight MH370 on March 8. The loss-making company's problems deepened on July 17 when its Flight MH17 was shot down over Ukraine, killing all 298 people on board.

"We see the exercise as a good opportunity for shareholders to exit the stock," MIDF Research wrote in a note to clients on Monday.

"Based on our estimates, we expect MAS' airline operations to remain loss-making over the next few years premised on the current weak yield environment and high jet fuel price," the research house added.

Khazanah, chaired by Prime Minister Najib Razak, said it expected to give more details of the planned restructuring by the end of August after it has secured approval from shareholders.

The airline and its key stakeholders are in talks with banks for a strategic overhaul that could include the partial sale of its engineering unit and an upgrade of its ageing fleet, sources involved in the discussions have told Reuters.

The company turned in its worst quarterly performance in two years in the January-March period and has been burning through its operating cash.

MAS is expected to announce its April-June earnings on Aug. 20. Analysts said it could be the airline's weakest quarterly performance yet partly due to flight cancellations after the disappearance of MH370. ($1 = 3.1995 Malaysian ringgit) (Reporting By Yantoultra Ngui and Al-Zaquan Amer Hamzah; Editing by Michael Urquhart)

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