The RM6.1 billion MAS restructuring represents a double government bail-out of MAS after the outrageous RM1.79 billion buy-back of MAS shares at RM8 per share from Tajudin Ramli

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Media  Statement
by Lim Kit Siang

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The exercise involved:
 

• The national carrier raising RM3.9bil from a financing package involving the proposed sale and leaseback of eight aircraft – five new and three old – to a government (Ministry of Finance Incorporated) special purpose vehicle (SPV), Aircraft Business Malaysia Bhd (ABMB);
• Disposal of properties worth RM2.2bil to a government SPV. The properties include its headquarters in Jalan Sultan Ismail; 34 office and workshop buildings forming the MAS office complex in Sultan Abdul Aziz Shah Airport in Subang, its Kelana Jaya complex, which hosts its MAS Academy; and 21 buildings forming the MAS Complex located at KL International Airport;
• The start of negotiations with a consortium comprising Fahim Capital Sdn Bhd, Advent Group Management Sdn Bhd and LSG SkyChefs for the proposed sale of 70% equity in MAS Catering Sdn Bhd.

Although the  asset sale plan would provide a lifeline for the national carrier, it is nothing more than double government bail-out of MAS after the outrageous RM1.79 billion buy-back of 29.09 per cent stake in MAS  from Tan Sri Tajudin Ramli’s Naluri Bhd. at the sucker’s price of RM8 per share, which was a premium of RM4.32 or 117 per cent over the closing market price of RM3.68 when the deal was signed  on 20th  December 2000.

Up to now, there has been no proper responsibility or accountability for such an outrageously exorbitant buy-back price paid by the public taxpayers,  without any independent professional valuation, although the then Finance Minister, Tun Daim Zainuddin, had blithely and irresponsibly told  Parliament in March last year that MAS was worth RM15 per share!

Equally disturbing is the Business Times report  that the  Employees Provident Fund (EPF)  has bought 6.47 million of MAS shares, about a fifth of all the airline’s shares traded in the open  market last month.  As a result, EPF owns more than 12 per cent of the airline — third-largest shareholder.

It has been reported that EPF may  have spent up to RM18 million to buy the shares last month. Filings made available by the Kuala Lumpur Stock Exchange showed that EPF bought the shares in three tranches on December 4, 12 and 21. EPF  could have bought more shares as  the filling of any such transactions would only be made public sometime next week.

 Analysts said the purchase has helped push up the price of  MAS shares. From September 11 up to the end of November last year when EPF’s interest on MAS shares were cold at  best, the stock had fallen 67 per cent from RM3.40 to RM2.03 a share. EPF started buying the airline’s shares actively from December 4 up to December 21, and during the period, the shares appreciated by 40.66 per cent or 85 sen each to  RM2.94 from RM2.09.

EPF should explain to the 10 million EPF members the reason for such vast investments in MAS, especially as it has lost its stock trustee status when it failed to pay a dividend in the last  financial year.   A company which wishes to maintain its stock trustee status will have to pay a minimum  of 2 per cent in dividend yearly regardless of it registering a profit or loss.

Such EPF explanation is warranted as the EPF had in the past been used as a captive fund to help the government to bail out failing crony companies at the expense of the interests of the 10 million EPF members.

(8/1/2002)