Highlight MAS cash call 41.5% oversubscribed

Business & Markets 2013
Written by Madiha Fuad of theedgemalaysia.com
Tuesday, 28 May 2013 07:58
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KUALA LUMPUR: Contrary to the pessimistic view on MALAYSIAN
AIRLINE SYSTEM BHD []’s (MAS) massive cash call to raise RM3.1
billion, the national carrier has received excess applications for its rights
issue.
MAS announced yesterday it had received valid acceptances and
excess applications for a total of 18.92 billion rights shares. This
represents an oversubscription of 41.51% or 5.63 billion shares.
“Accordingly, 85.4 million excess rights shares will be allotted pursuant
to excess applications in accordance with the basis as stated in the
abridged prospectus dated May 6, 2013 in relation to the rights issue,”
said MAS.
To recap, MAS issued 13.37 billion rights shares as part of its plan to
turn around the ailing carrier, which had posted net losses for financial
year 2012 (FY12) and FY11.
MAS also undertook a capital reduction to reduce the par value of its
shares to 10 sen from RM1 previously. With that, MAS has wiped out its
accumulated losses of RM7.9 billion.
The four-for-one rights issue at 23 sen per share is the third cash call by
the carrier in six years.
Not many analysts were optimistic about the rights issue following MAS’
several failed attempts to revive its financial health over the past 10 years, on top of the gloomy industry outlook.
Earlier on, MAS’ provisional rights entitlement (MAS-OR) changed hands at barely three sen per unit as shareholders were
dumping MAS-OR on the open market. Some analysts saw it as an indicator that existing shareholders were not keen on
forking out 92 sen to subscribe to the rights issue.
Substantial shareholder Khazanah Nasional Bhd is entitled to 9.27 billion rights shares, which will contribute about RM2.1
billion to MAS’ fundraising exercise.
The sovereign wealth fund, which owns a 69.37% stake in the national carrier, is the only substantial shareholder who has
committed to the rights issue. The Employees Provident Fund is another substantial shareholder with 5.85% equity interest.
MAS will announce its first quarter (1Q) results tomorrow. Maybank IB Research expects the carrier to post a core profit of
RM10.6 million compared with a loss of RM366.8 million in the previous corresponding quarter.
The research house also noted that MAS is on track to receive 16 new aircraft and dispose of 22 old aircraft this year, which
will help to reduce operational cost and enhance product quality.
MAS’ share price settled at 40.5 sen yesterday, a 26.6% increase from its all-time low of 32 sen on April 30 this year.