Hot Seats on MAS!

Going Nowhere?

On 6 November 2014, the same Board of Directors of MAS will again face the bitter minority shareholders.

Unless they can say something pleasing and reassuring to the ears of the minority shareholders or give them a handsome subsidised flight ticket to partly off-set their massive losses holding below par value MAS shares for ages, expect fireworks just like what MAS experienced at their recent rowdy AGM.

This time around-will the minority shareholders allow Khazanah to take MAS shares off their hands for a song? Will Khazanah succeed in privatising MAS?

While independent adviser AmInvest Bank may verbalise the obvious financial platitudes to placate minority shareholders and that the Khazanah offer is prima facie both 'fair' and 'reasonable', I think it will be an uphill task as the shareholders may be looking for a better deal.

Khazanah proposes paying 27 sen per MAS share to take it private so that they can restructure the company and resuscitate it back to financial health. 

It involves both a capital reduction and repayment exercise. 

Let us look at the forces of Khazanah and the minority shareholders.  While Khazanah owns 69.37% interest in this airline, the next 29 biggest shareholders sadly only hold an aggregate quantum of 6.57% of MAS shares. Strangely, 4 billion shares or 24% lie in the hands of the average Joe and Jane investor. They are  an absolutely unhappy lot!

To get through its SCR proposal, Khazanah needs at least 50% in numbers as well as 75% in value acceptance (Likely through a poll with proxy strength). 

I am not sure about what 50% in number means? Does it mean Khazanah and the 29 biggest shareholders of MAS? Or the 4 billion share bloc? Or those who are attending in person and through a vote of hands?

Apart from that, Khazanah needs 90% acceptance from shareholders to de-list MAS from Bursa Malaysia. This may be a tall order again if the mood and tide goes awry on 6th November with the average Joe and Jane shareholder. 

As part of the new plan to salvage MAS, Khazanah will invest RM6bil more, cut 6,000 jobs and migrate the airline’s into a new company which will be operational on July 1,2015.

Interestingly, the circular warned that if Khazanah failed to get the votes it needed to push through its plan, MAS would remain listed and there would be no RM6bil cash-injection from Khazanah, and if MAS continued to incur heavy losses coupled with its cash reserves of RM2.4bil depleting over the next 12 months, the airline could become a PN17 company.

I wonder how the minority shareholders will hold up against this serious scenario.

Will they bite the bullet and go down with the airship or will they run helter skelter with 27 sen to a dollar?

This is an EGM that will  likely see conflagration,not a whimper. 

All minority shareholders should attend!

Can the Chairman, CEO and Board members of MAS willing and ready to be on these hot seats to be grilled once more on 6 November?

The jury is out on that one.