Malaysia Airlines to Be Delisted in $429 Million Buyout.

http://www.bloomberg.com/news/2014-08-08/malaysia-airlines-halts-shares-as-board-prepares-to-restructure.html

Malaysian Airline System Bhd. (MAS) will be delisted after sovereign wealth fund Khazanah Nasional Bhd. offered to buy out minority shareholders in a restructuring plan for the national carrier that suffered two disasters this year.

Khazanah will pay 27 sen a share for a total of 1.38 billion ringgit ($429 million) to buy the remaining 30.6 percent it doesn’t own, it said in a statementtoday. The airline will need “substantial funding requirements” for the next few years to sustain operations, it said. Prime Minister Najib Razak said the revamp will involve “painful steps and sacrifices.”

The carrier is struggling to stem losses and repair its image after the downing of Flight 17 in Ukraine last month compounded woes from the disappearance of a jet in March. Malaysia Airlines has grappled with increased competition and higher costs even before Flight 370 vanished, as low-cost rivals flooded the region with planes and drove down fares.

“By privatizing it first, it makes the restructuring easier,” said Jason Chong, who helps manage close to $2 billion as chief investment officer at Manulife Asset Management Services Bhd. in Kuala Lumpur. “If you leave it as a public-listed company, there’s a lot more regulatory requirements that you have to adhere to.”

Missed Target

The company missed its target to be profitable last year as rising prices for items including fuel, maintenance and financing wiped out revenue gains. In May, it pointed to an unfavorable foreign exchange rate environment as an additional challenge this year.

“The proposed restructuring will critically require all parties to work closely together to undertake what will be a complete overhaul of the national carrier on all relevant aspects,” Khazanah said. “Nothing less will be required in order to revive our national airline to be profitable as a commercial entity.”

A passenger checks in at the Malaysian Airlines first class counter at Kuala Lumpur International Airport in Sepang, Malaysia, on Aug. 8, 2014. A Malaysia airlines jet was shot down in Ukraine in July, four months after a jet en route to Beijing from Kuala Lumpur vanished.