The Malaysian sovereign wealth fund has announced it would buy out minority shareholders of Malaysia Airlines to take the carrier private after two consecutive disasters this year.
Khazanah Nasional, the investment arm of the Malaysian government, said it would pay about 1.4 billion ringgit ($437 million) to buy 30% of the airline. The $32 billion sovereign wealth fund already owns 70% of the company.
As the airline’s sole owner, the fund proposed it would take steps to de-list it from the Malaysian stock market, allowing for “a complete overhaul” with fewer regulatory restrictions.
“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,” Khazanah Nasional said in a statement.
The restructuring scheme would reform the airline’s “operations, business model, finances, human capital, and regulatory environment,” the fund said.
Malaysia’s Prime Minister Najib Razak also announced the government is in the final stages of completing a “holistic restructuring plan” with the sovereign wealth fund’s cooperation.
“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,” –Khazanah Nasional.
“This is the first step needed to return our national carrier to profitability,” Razak said. “It is a step I wholeheartedly support. With due process and following the relevant approvals, we expect that a detailed plan will be announced before the end of August.”
According to the fund’s annual review, Khazanah’s assets rose 19.1% in 2013, with a compounded annual growth rate of 12.5% per annum since 2004.
“The year 2013 was eventful with highlights including better operating performance across practically all of Khazanah’s investee companies, deepening of the regional presence of various companies,” the fund said.
Khazanah Nasional—founded in 1993—also opened overseas offices in San Francisco and Istanbul in 2013. The fund is headquartered in Kuala Lumpur and already has regional offices in Beijing and Mumbai.
Malaysian Airlines suffered an unexplained disappearance of flight MH370 in March and a crash of flight MH17 in Ukraine in July. According to Bloomberg, the airline’s shares had plunged 23% this year adding to $1.3 billion in debt racked up over the last three years.
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