It said on Friday it had submitted a request to MAS to undertake a selective capital reduction and repayment exercise (SCR) of 27 sen a share under the restructuring exercise, which would take six to 12 months to complete.
Khazanah owns 11.59 billion shares of MAS or 69.3%. Under the exercise, this would entail it forking out RM1.38bil to buy the remaining 5.118 billion shares, which it does not own.
"The proposal will enable minority ordinary shareholders of MAS to receive a capital repayment amount of 27 sen per ordinary share. This represents a 12.5% premium to closing price on Aug 7 2014 and a 29.2% premium to the three-month volume weighted average market price (VWAMP)," Khazanah said.
"Upon successful completion of the proposed SCR, Khazanah will become the sole ordinary shareholder of MAS, which would lead to a de-listing of MAS," said the government investment fund.
However, some quarters said while MAS was biting the bullet in the restructuring exercise, an analyst described it as a "moral hazard" based on the poor financial performance of the airlines. Another analyst said minority shareholders should accept the 27 sen offer.
Meanwhile, MAS said it had received notice of Khazanah's intentions to take full ownership and de-list the airlines.
"Our board of directors will be deliberating this proposal and an official response from the company will be issued later. During this period, our business operations remains unchanged," it said.
In its first quarter ended March 31, 2014, MAS had posted net losses of RM443.39mil compared with RM278.83mil a year ago. Its revenue was marginally higher at RM3.6bil compared with the RM3.537bil a year ago.
Its net asset per share was 21 sen compared with 24 sen a year ago.
Trading in Malaysia Airlines (MAS) was suspended from 9am to 5pm on Friday.
Khazanah's deslisting plan under the restructuring exercise plan comes after one of the loss-making carrier's aircraft, MH370, disappeared on March 8. On July 17, MH17 was shot down over Ukraine.
A total of 537 people have lost their lives in the two tragedies.
Below is the statement issued by Khazanah Nasional:
We are pleased to announce that Khazanah Nasional Berhad (Khazanah) has today submitted a formal request to the Board of Directors of Malaysian Airline System Berhad (MAS) to undertake a selective capital reduction and repayment exercise ("Proposed SCR") of MAS' ordinary shares.
The proposal will enable minority ordinary shareholders of MAS to receive a capital repayment amount of RM0.27 per ordinary share. This represents a 12.5% premium to closing price on 7 August 2014 and a 29.2% premium to the 3-month volume weighted average market price ("VWAMP").
Upon successful completion of the Proposed SCR, Khazanah will become the sole ordinary shareholder of MAS, which would lead to a de-listing of MAS.
In June 2014, Khazanah had announced that it was in the midst of undertaking a comprehensive review of MAS, in consultation with the Special Shareholder, the Minister of Finance Incorporated.
Khazanah further clarified that subject to the necessary approvals from the relevant authorities, it would announce the proposed restructuring scheme within a period of 6 to 12 months.
We reiterate that 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 of, inter alia, the airline's operations, business model, finances, human capital and regulatory environment. Nothing less will be required in order to revive our national airline to be profitable as a commercial entity and to serve its function as a critical national development entity.
In this regard, today's proposal for de-listing represents the first stage of the restructuring scheme. Further, Khazanah is in the final stages of completing the overall restructuring proposal, and upon due process and approvals from the relevant authorities, regulators and the Special Shareholder, the Minister of Finance Incorporated, we envisage that additional detailed plans will be announced by the end of this month.
