MAS airlines may need small rights issue for cash
MAS airlines may need small rights issue for cash
KUALA LUMPUR (AFP): Malaysia Airline System Bhd (MAS) could
opt for a "small rights issue" to raise cash to part-finance
purchase of 25 new Boeings due to arrive over the next five years
as it expands its fleet.
MAS chairman Tajudin Ramli told Bernama news agency in an
interview published yesterday that the national airline company
was only short of 500 million ringgit (US$200 million) to finance
the 10-billion-ringgit ($4 billion) expansion plan.
Tajudin, who in July dismissed the need for a rights issue,
maintained that MAS still had "a very strong cash flow
situation."
"We have already paid a certain amount for the 25 aircraft.
What we need to do as we go along is to pay a small amount every
year," said Tajudin, who controls 32 percent of the national
airline company.
"The total amount is less than $4 billion. Over the next five
years, our cash flow will be very strong and we are going to sell
our old aircraft anyway," Tajudin added.
He said based on his calculations, MAS would only be short of
500 million ringgit. "And that is five years away."
"If we undertake a small rights issue, that would be more than
sufficient to take care of that half a billion ringgit. I am not
particularly worried about it," he asserted.
MAS has since July been trying to convince industry analysts
that it will have no problems financing the fleet-expansion,
after ordering in January 15 Boeing 777s and 10 747-400s, with an
option for two Boeing 777s and three Boeing 747-400s, from The
U.S. Boeing Commercial Airplane Group.
Analysts have doubted MAS's ability to pay for the purchase,
given its present debts of over six billion ringgit.
"Our gearing ratio has come down to 1:6 from 1:8 previously
and we are working to reduce it further," Tajudin said, adding
that the company was continually seeking for the best ways to
finance its capital requirements.
"This is an ongoing exercise. We are not quite happy with 1:6.
In fact we want to bring it much lower," he said.
Tajudin also said MAS was still discussing with Boeing a plan
to buy at least six Boeing super jumbo in order to be its launch
customer.
Tajudin also revealed plans to forge additional strategic
alliances with airlines in Europe and North America after having
benefited from such and alliance with Virgin Atlantic of Britain
and Ansett Airlines of Australia.
Speculation has been rife that Tajudin planned to divest his
stakes in MAS. But Tajudin on Friday said the divestment had
never crossed his mind at all.
"Otherwise, why should I spend so much time and effort doing
what I am doing today," he had said.
MAS stock ended five sen lower at 6.45 ringgit on the local
bourse Monday.