Embattled MAS announces US$800.19 million Sukuk plan (By IFN)

MALAYSIA: National carrier Malaysian Airline System (MAS) has unveiled a RM2.5 billion (US$800.19 million) Sukuk program in an effort to boost capital after reporting record losses in 2011.

Its Sukuk program forms the tip of the iceberg of a RM9 billion (US$2.88 billion) funding plan that includes a RM1 billion (US$320.08 million) bridging loan from a consortium of banks and a proposal for the government to set up a special purpose vehicle to raise RM5.3 billion (US$1.69 billion) to pay for aircraft purchases.

“The proposed Sukuk would have an effective tenor of 10 years, as MAS would have a call option to redeem the Sukuk in full from year 10 onwards. For the first 10 years, the profit rate payable on the Sukuk is based on the prevailing market rate at the time of issuance; and after the tenth year, the profit rate payable on the Sukuk would rise by a pre-determined rate.

“We anticipate to drawdown the first tranche of RM1 billion of the proposed Sukuk, sometime in June 2012 once all regulatory approvals are cleared; and for the remaining amount of the program later,” said MAS.

MAS also received a RM1 billion bridging loan from CIMB Bank on the 30th March 2012 to ensure its working capital cash balances remain adequate until the expected drawdown of the first tranche of its planned Sukuk.

Having been distressed for several years, the airline recently announced its widest ever loss of RM2.5 billion for 2011, followed by a loss of RM171.8 million (US$54.99 million) in the first quarter of this year. It reported cash and cash equivalents of just RM1.35 billion (US$432.1 million) during the quarter.

See: http://redmoney.newsweaver.co.uk/vrm6mdax8h7h38rwoni3wx?email=true&a=6&p=24341255&t=21298115