MAS-PRIVATIZATION OR ASSET STRIPPING

MAS-GOLD UP FOR GRABS

Even before the bodies of MH 17 passengers had turned cold, representatives of Malaysian Airlines, now under siege and in severe financial stress, have laid out on the table, the assets of their company to be devoured by a regional competitor, suitor and raider.

That suitor raider is the national airline of a large and powerful neighbor. In between that proposed acquisition of MAS stands a Vulture fund. That Vulture fund appears to be Kazanah (raider) and a third party financier.

Nothing is likely to happen in the immediate aftermath of this revelation nor any announcement made in the short term about the proposed merger/ acquisition of MAS by the acquirer national carrier of a neighbour.

MAS and Kazanah in the event the acquisition is queried by the public will say that “the deal has always been on the cards. There is nothing new about it”.

Such a response will not only be misleading but it will not be reflective of the true situation regarding the planned asset stripping of MAS. The truth is more like this:

Whilst the proposed takeover of MAS has been in the contemplation of both sides for some time now as it has been in the minds of others, it has not been taken so far as to allow the Australian media to run a paid and lengthy campaign by one of its outlets to further run MAS to the ground with sordid allegations of sexual impropriety by MAS staff making any acquisition of the airline a bargain.

BEAT IT UP AND MAKE IT LIGHTER

An allegation of sexual assault by an Australian woman the subject of an Australian TV station run documentary is no coincidence. The allegation has not been tried in a court of law, yet the paid for and aggressive campaign by the Australian TV station against not only the steward at the centre of the complaint but MAS as an airline has been allowed to run unchallenged by MAS or the Malaysian government.

The silence by MAS management and the Malaysian government in the face of this allegation and trial by media, a breach of all norms and the legal rights of both MAS and the steward in question if not hopelessly incompetent is criminally negligent of Malaysia’s government and MAS’s management.

The purpose of this media exercise we understand is to run the reputation of MAS to the ground by those forces acting in collusion with a potential buyer of the airline so that any proposed acquisition of MAS’s assets will be considerably less than if its goodwill and reputation was part of the bargain.

But delisting (as a first step) then proposed stripping via a merger of MAS with this foreign airline had never been simply “on the cards” so to speak as far as the long term intentions of asset stripping of MAS by the suitor is concerned. It has been a planned campaign waiting in the wings. It is just that the script has recently been changed to accommodate the recent tragedies involving MAS.

MAS A TOP 10 AIRLINE- THE SUITOR A BOTTOM 5 LOSER

MAS’ assets are and have been for some time coveted by many major airlines. The airline industry has been in a state of flux for over a decade with volatility in labour markets, cost overruns with aircraft manufacturers, delays in delivery times for new aircraft, volatility and unforeseen price fluctuations in the price of fuel and finally last but not least risks presented by foreign exchange fluctuations all of which have impacted on MAS’s bottom line.

Barring some of these contingencies and unforeseen events MAS has for sometime been a profitable and well managed airline. The foreign airline presently seeking to acquire MAS via a proposed “merger” has been a complete opposite in terms of its image, profitability, quality of service, reputation and long term viability. The suitor raider airline has a great record for airline safety but nothing else to show as an airline. No two airlines given their respective histories could be more different and incompatible.

The opportunistic and some would say mercenary, insensitive approach to a take-over of MAS at this time in its history, for a song at that, is from the information available, nothing short of ‘stealing the pennies off a dead mans eyes’. And further still what appears to be an irrational accommodation by the Malaysian government of the foreign airline’s ambitions through Kazanah may well be unlawful.

30 SEN IN THE RINGGIT OR 30 PIECES OF SILVER FOR A BETRAYAL

The rumoured offer of 30 sen for every share held by non-government shareholders is not a proper offer for the purpose of an acquisition and privatization of MAS by Kazanah. The terms of the offer have not been properly disclosed. The authority and the power under which such a restructure or offer can be made is not properly addressed. Even if they have been they are not complete as far as disclosures under the companies act is concerned to the level required.

The remaining 30% of the MAS share register is being held ransom to the ambitions of those at Kazanah who stand to reap millions in fees in order to “midwife” this privatization (prior to an asset sale or striping as we see it) is unfair.

Their payment to the government shareholder for its shares may be a preferred transaction and one that could be set aside if challenged by other shareholders in the minority in  a court.

The Malaysian government, the largest single shareholder in MAS is literally being offered pennies for the assets of MAS in this privatization bid, later intended to be a merger of MAS with that regional competitor.

If the Malaysian government as shareholder of MAS accepts the Kazanah proposal without a proper debate on all outstanding issues and disclosures relating to the transaction it will be in breach of the corporations law.

BEGGARS BANQUET?

The regional competitor airline seeking to acquire MAS’s assets through a cosmetic merger is itself a struggling financially distressed behemoth. The would be acquirer airline in this case has itself been spurned by other airlines it has approached to bail it out of its own seemingly insurmountable problems over the past 3 years.

Its own assets and brand has been turned down by almost every major airline it has approached  because of its torrid history of industrial disputes  and staff misconduct in its home base.

Industrial action is believed to be the single most destructive factor that has caused the near demise of the suitor airline who Kazanah is believed to be working with and for. And the situation for the suitor airline it will not get any better unless it is able to register most of its fleet and operations in a foreign jurisdiction like Malaysia or Singapore where labour laws are more rigid and intolerant of disruptive industrial action, compliance and operating costs much lower than it is in its home base.

WHO DARES WINS

Much money has already changed hands in “consultancy fees” “due diligence” and lobbying. It runs into millions of dollars even before a proper shareholder announcement has been made.

MAS’ board must come clean with full disclosure now not through Kazanah which has an agenda of its own and relies on the fat fees it makes from brokering such deals. It has to disclose its intentions, lay bare its creep up acquisitions since MH 370 and before and how much it has since acquired since MH 17 off market. It has an obligation to the investing public as the government has to its constituents at large.

The government of Malaysia appears to be unconcerned by the media campaigns to destroy MAS’s reputation regardless of how and who is conducting that smear campaign against MAS and one of its employees.

Whats particularly disturbing is that the media campaign against MAS of an allegation of sexual abuse is before a court in Paris and the airing of one side of the story by the Australian media channel will not allow a jury or court to decide the fate of the steward with the benefit of impartial and independent evidence.

It is time the Malaysian government showed some spine and upheld the rights and dignity of its citizens and its flag carrier in the face of such a situation rather than remaining indolent and impotent like servants of the old colonials in days gone by.

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