27-Jan-2010 8:30 AM

Malaysia Airlines shareholders approve rights issue

Malaysia Airlines received (25-Jan-2010) shareholder approval for a proposed rights issue to raise USD779.3 million (MYR2.67 billion) to fund its future fleet growth and expansion.

  • Pricing: At USD0.47 (MYR1.60) each, the rights shares are priced at a 32.1% discount to the theoretical ex-rights price of about USD0.69 (MYR2.36) based on a five-day volume weighted average market price up to and including 21-Dec-2009. The rights shares will be offered to shareholders on the basis of one rights share for every one share at a date to be announced later;
  • Underwriters: MAS entered into an underwriting agreement with Maybank IB, CIMB and RHB Investment Bank Berhad ("RHB") on 26-Jan-2010 for the rights issue. Maybank IB and CIMB are the Joint Financial Advisers and Joint Underwriters, whilst RHB is a Joint Underwriter for the issue;
  • Proceeds: To be used for MAS’ fleet renewal programme, as it moves from a 100% leased fleet to owning at least one third of its aircraft, and working capital, with the issue expected to improve liquidity and financial flexibility. The rights issue and aircraft acquisitions are expected to be completed by 1Q2010.
  • New aircraft: Shareholders also approved the proposed acquisition of six A380s and the proposed Boeing aircraft bundling comprising four aircraft from Penerbangan Malaysia Berhad for a consideration of approximately USD930.9 million (MYR3.19 billion). [more - Press Release] [more - EGM results] [more - note to shareholders] [more - note to shareholders] [more - underwriters]

Malaysia Airlines: "Leasing provides flexibility but imposes additional costs. Typically, airlines do not need to have management flexibility for more than two thirds of their fleet. With the new strategy of owning and leasing our aircraft, we will be able to improve our cost structure,” Dr Munir Majid, Chairman. Source: Malaysia Airlines, 25-Jan-2010.

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