A Malaysian private firm, Golden Skies Ventures (GSV), with the funding from a European bank, has offered a $2.5 billion to fully take over the holding company of ailing state-backed carrier, Malaysia Airlines, the executives of GSV told Reuters on Monday, April 6, 2020. The aviation-based investment firm, GSV, which was set up by former Malaysia Airlines officials and professionals with aviation experience, made the proposal a month ago.
GSV’s Takeover Proposal
Airlines around the world had been devastated due to travel restrictions following the coronavirus pandemic and Malaysia Airlines was one of the worst causalities of this impact. Citing the interest to a buyout of the debt-ridden airline, the CEO of GSV, Shahril Lamin told Reuters in a phone interview, “(We have secured) in excess of $2.5 billion from the bank. We will take about three to four months to get long-term financing.”
Without giving details on the firm involved, GSV declared that it would receive funding from a Japanese private equity firm that promised to inject immediate funds into the aviation group through an equity deal. The investment firm further noted that it was in talks with other foreign banks and private equity firms for further funding for the airlines.
GSV said that it has also submitted its proposal to Morgan Stanley which has been hired by the aviation group’s sole owner, sovereign wealth fund, Khazanah Nasional Bhd. Sources mentioned that Japan Airlines Co Ltd, domestic carriers AirAsia Group Bhd, and Malindo Air have shown interest in Malaysia Airlines.
Prospect of the Future Operation
The takeover offer made by GSV included owning the government’s so-called golden share, which allows majority voting rights and maintains Malaysia Airlines’ flag carrier status. Citing its ample liquidity, GSV projected that it could support the airline operation comfortably for up to 18 months.
GSV officials explained, after the proposed takeover, it would reinstate Malaysia Airlines as a premium long-haul airline by expanding its flight network and maximizing utilization of its 81-plane fleet besides maintaining other business units such as the budget airline, cargo freighter and maintenance repair, and overhaul unit.
Deputy Chief Executive, Ravindran Devagunam, who is also working as Director at PEMANDU, said, “(It) is still a viable venture, it has inherent strengths. We are saying we won’t lay off the 13,000 frontline employees and we are not going to asset-strip the airline.” Asserting a positive consequence of its operation amid the impact of the virus outbreak, he added, “Regardless of how long (the virus) will take this year, we are looking at an uptick in the business from summer 2021.”
The firm officials revealed that it would be also focusing on achieving positive earnings before interest, taxes, depreciation, and amortization within three years of taking over, with targets of 15 billion ringgit ($3.5 billion) in revenue in 2025.
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