PART OF RECOVERY PLAN: Proceeds will be used to clean up balance sheet
NATIONAL carrier Malaysia Airlines (MAS) has received its shareholders' approval to undertake a rights issue to raise RM3.1 billion as part of its recovery plan.
In a statement to Bursa Malaysia yesterday, the airline said at its extraordinary general meeting here yesterday, shareholders also approved resolutions relating to reduction of par value and share premium account, and an amendment to the memorandum and articles of association of MAS.
MAS' par value of each existing ordinary share of RM1 will be reduced by 90 sen to 10 sen each, while the reduction of its share premium account will be up to RM4.99 billion.
Meanwhile, the amendment to the memorandum and articles of association of MAS is to facilitate the reduction of par value and share premium account.
The MAS board will allot and issue the number of rights shares to raise gross proceeds of up to RM3.1 billion. However, the issue price and entitle-ment date have yet to be determined.
MAS group chief executive officer Ahmad Jauhari Yahya was yesterday quoted by Bernama as saying: "Implementation of the proposals will allow MAS to effectively 'reset' our business model and 'reboot' our financials."
In November last year, MAS announced that it plans to undertake a RM3.1 billion cash call plus a RM8 billion capital reduction exercise to help clean up its balance sheet and wipe out its accumulated losses.
"The basis of entitlement and the issue price have not been fixed at this juncture to provide flexibility to the board, in respect of the pricing and the number of rights shares to be issued," MAS was quoted as saying.
Major shareholder Khazanah Nasional Bhd has given MAS its irrevocable and unconditional undertaking to subscribe for its full entitlement under the proposed rights issue.
MAS has said that proceeds from the proposal will be used to finance capital expenditure, for working capital requirements and to reduce borrowings.