Khazanah to disburse RM1.6 bln as second phase of funding to MAS

Khazanah Nasional Bhd is scheduled to disburse up to RM1.6 billion to Malaysia Airlines (MAS) as part of the second phase of conditional investment funding within the next three months.

The conditions for the disbursement are the delivery of several key milestones, among others, a new company (NewCo) business plan approved by Khazanah and the MAS board of directors, Khazanah said in its second MAS Recovery Plan (MRP) Quarterly Progress Update.

MAS NewCo is the company taking over MAS as part of the restructuring of the national carrier, which Khazanah has 100 per cent interest.

Other conditions needed for the funding are a corporate governance review, implementation of a talent selection process as well as talent management and development programmes, and financial and operational targets to be agreed upon.

As called for under the MRP, the completion of the selective capital reduction and repayment (SCR) and the delisting of MAS are necessary conditions for Khazanah’s commitment to disburse investment funding of up to RM6 billion on a phased basis and under strict conditions.

Of the first phase of conditional investment funding amounting to RM2 billion targeted for end-December 2014, RM1.38 billion was disbursed for payment to shareholders pursuant to the successful SCR exercise.

The remainder of this first phase of funding will be disbursed based on MAS cashflow requirements and conditions set by Khazanah.

Furthermore, as part of MAS’ long-term goal of reducing its gearing, discussions on the terms of a proposed debt-for-equity swap with several parties are ongoing, with broad agreement on key terms targeted by the end of first quarter of 2015 and execution of definitive agreements in second quarter of 2015.