Little-known firm makes RM8.75 billion bid to rescue MAS

Debt-ridden Malaysia Airlines (MAS) is slashing 6,000 jobs as part of restructuring efforts unveiled by majority owner, Khazanah. The airline has also been delisted. – The Malaysian Insider file pic, December 15, 2014.

Little-known Jentayu Danaraksa Sdn Bhd is proposing a RM8.75 billion deal to "rehabilitate" debt-ridden Malaysia Airlines (MAS), saying it can save the 6,000 jobs being cut at the flag carrier under a government plan.

The company said the proposal to be revealed today would include a sale and leaseback of aircraft being used by the loss-making national airline, which its owner, Khazanah Nasional Bhd, is restructuring under a RM6 billion deal.

"The proposal entails a cash consideration of up to RM8.75 billion (US$2.5 billion) with an offer to include Khazanah Nasional as a partner in JD Leasing, a new aircraft leasing company to be formed after the acquisition of Penerbangan Malaysia Bhd (PMB), via issuance of ‘strategic shares’ in JD Leasing at no cost," according to a statement posted on Jentanyu managing director Feriz Omar's (pic) Facebook account.

"JD Leasing has identified strategic partner(s) with a proven track record in the global aircraft leasing and trading business," it said in the statement.

"JD Leasing will undertake to pay up to RM5.25 billion (US$1.5 billion) to acquire MAS aircraft via a 'sale-and-leaseback' agreement with the MAS NewCo management subject to terms and conditions to be agreed upon, including types of aircraft, age and residual values.”

It said that JD Leasing would also seek to refinance the RM3.5 billion (US$1 billion) bond issued by PMB, which is due in 2016, and promised the ailing national carrier "preferential rates" should it lease aircraft from them.

"Jentayu Danaraksa endeavours to support MAS under the Asean Open Skies policy starting 2015 by ferrying passengers to destinations not served by the carrier.

"Taking all these into account, we believe the government needs to inject significantly less than the RM6 billion it has allocated under the 12-point plan," it added.

The company is expected to have a press conference later this afternoon to reveal its RM8.5 billion proposal that, it promised, could save the jobs that were slated to be slashed as cost-cutting measures to save the flag carrier that was hit by two separate jet disasters this year.

According to a news report, Jentayu is a financial advisory firm, set up only recently and chaired by former MAS managing director Tan Sri Abdul Aziz Abdul Rahman.

MAS is to be taken private by Khazanah, which owns more than 69% of the carrier. Earlier in August, it had announced its plan to buy out shares it does not own at 27 sen for each MAS share, amounting to nearly RM1.4 billion, to take the troubled airline private.

Last May, the struggling airline reported its biggest quarterly loss in more than two years, hit by a sharp drop ‎in passenger traffic after what it called the "dramatic impact" of the unexplained disappearance of flight MH370 in March.

MAS's net loss expanded to RM443.4 million in the first quarter, from a net loss of RM278.8 million in the same period last year.

It is the carrier's worst quarterly loss since October-December 2011. MAS has lost money for the last three years, beset by high costs and stiff competition.

The restructuring plan could see up to 6,000 jobs cut, aimed at returning the national carrier to profitability.

Khazanah recently appointed Christoph R. Mueller as the chief executive officer (CEO)-designate of Malaysia Airlines Bhd (MAS NewCo), effective January 1 next year.

- TMI