Super Syed Mokhtar eyes MAS


February 22, 2013

Super Syed Mokhtar eyes Malaysia Airlines (MAS)

by Jose Barrock@www.kinbiz.com

Businessman Syed Mokhtar Albukhary is proposing to the Federal Government to take over national investment arm, Khazanah Nasional Bhd’s 6.3 percent equity interest in ailing Malaysia Airlines, sources said.

Syed Mokhtar and his SifuWhile details of the businessman’s proposed takeover are not known, part of the deal may involve a long-term fuel subsidy by the government for as many as 60 years, they added.  However, one source close to Syed Mokhtar denied such a proposal to take over MAS. “We are strongly denying it….This is all just election play,” he said.

However two separate sources confirmed that such a deal is being contemplated at the moment although details are sketchy because it is still early yet. Khazanah did not respond to questions sent. At present, Syed Mokhtar’s airline related assets include the Sultan Ismail Airport in Johor, which is owned by Senai Airport Terminal Services Sdn Bhd. This was acquired from Malaysia Airport Holdings Bhd, another Khazanah controlled entity, for RM80 million in 2003.

Johor Port

Johor Port

He also controls two ports, Port of Tanjung Pelepas Sdn Bhd and Johor Port Bhd, both under his flagship MMC Corp Bhd. He is also understood to be close to buying Penang Port Sdn Bhd. MMC is also doing a due diligence of Keretapi Tanah Melayu, the state controlled train operator.

Syed Mokhtar controlled DRB-Hicom Bhd last year took over auto maker Proton Holdings Bhd, and postal services operator Pos Malaysia Bhd. This adds on to DRB-Hicom’s existing banking, property and automobile distribution and assembly business.  The businessman’s current thrusts seem to be hinged on entering into all the key transportation and logistic areas in  Malaysia. But his reach extends far beyond that.

Many choice assets under Syed Mokhtar

 Syed Mokhtar’s flagship company is MMC in which he has a 51.76 percent equity interest. MMC’s interests include power generation via Malakoff Bhd, the two ports and engineering and water distribution among a whole host of others assets.

Recently Puncak Semangat Sdn Bhd, a company believed to be linked to thePuncak S businessman was awarded the lion’s share of the 2.6 GHz spectrum for 4G-LTE (long term evolution). Puncak Semangat bagged 40 MHz, while the other seven were only awarded 20 MHz.

Recent news reports have speculated that Syed Mokhtar is looking to take over NCB Holdings Bhd’s port operation arm Northport (M) Bhd, after he bid for Penang Port Sdn Bhd.  Other than MMC and DRB his other vehicle is Tradewinds (M), which has plantations, sugar distribution and a monopoly of rice distribution via Padiberas Nasional Bhd.

The businessman had also attempted to buy PLUS Expressways Bhd from Khazanah, but that attempt was thwarted by Khazanah owned UEM Group Bhd and the Employees Provident Fund (EPF).

Many market watchers are questioning why so many choice assets are being sold to Syed Mokhtar. Hs aides defend the moves.  “But to his credit, he takes control of the assets via bidding higher than other players.

For example about 10 years ago, Syed Mokhtar’s private company Restu Jernih (Sdn Bhd) bought 32 percent of Pernas (International Holdings Bhd which has since morphed into Tradewinds) for close to RM500 million (RM497 million) or about RM2.10 a Pernas share and 64 sen per Pernas warrant from Perbadanan Nasional Bhd. ….it was not a sweetheart deal, he paid much more than the market price for the company,” an aide of Syed Mokhtar says.

At that time he forked out more than a 200 per cent premium for the shares and warrants of Pernas.  Pernas was set up in 1969 to promote Malay capital ownership, but the lumbering giant corporation failed in its agenda, and bled losses for the longest time.

As such the deal was viewed by many as a bailout.  Some bankers view Syed Mokhtar as a systemic risk, with his ballooning debts. While debt levels are high, his businesses are sustaining and performing well. For instance, his flagship MMC, as at end September 2012, had RM17.72 billion in long term borrowings, while the company’s short term debt commitments stood at RM4.04 billion. Much of this debt level comes from 51 percent in power generation unit Malakoff Bhd.

DRB-Hicom meanwhile as at end September had non-current liabilities of RM4.07 billion and short term debt of RM2.27 billion.  Tradewinds (M) had long-term liabilities of RM2.04 billion and short term borrowings amounting to RM1.74 billion.

Mixed misfortunes

For the nine months ended September last year, Malaysia Airlines suffered a pre-tax loss of RM477.96 million from RM9.89 billion in sales, a loss per share of 14.48 sen. However Malaysia Airlines in its notes which accompany its financials said that it recorded an operating profit of RM4 million for the third quarter ended Sept 30, 2012, compared to RM191.8 million in operating losses, for the quarter ended Sept 30, 2011.  An analyst from a bank backed research outfit said that Malaysia Airlines in the past, had several problems, such as aging airplanes, and legacy issues, such as flying to many unprofitable destinations.

He says that things however are picking up, and he highlights the break even in operating profit in September last year. “The management is doing something right obviously,” he said. The analyst added that he expects the airline to post “convincing profits” in the final quarter of FY2012.

Tajuddin Ramli  MAS’ story is a sad one riddled with cases ofTRMAS mismanagement. Last year former controlling shareholder and executive chairman of MAS, Tajudin Ramli settled out of court three lawsuits the national carrier had against him.

Tajuddin who was closely linked to former Finance Minister Daim Zainuddin was the poster boy for Malay entrepreneurs, and was the airlines Executive Chairman from 1994 to 2001.  His entry into MAS in 1994 came about when the Government sold 32 percent of MAS to his vehicle Naluri for RM1.79 billion.

Then in 2000, the Government acquired Naluri’s 29 percent stake in MAS for RM8 per share, which was double its market price then.  After much legal wrangling, a High Court decision in December 2009 ordered MAS’ Chief to pay Danaharta, the state asset management manager, RM589.14 million plus two per cent interest per year over the base lending rate backdated to January 1, 2006.  But eventually Tajuddin settled out of court, for an undisclosed sum. Tajuddin meanwhile has claimed that his purchase was forced “national service”.

20 thoughts on “Super Syed Mokhtar eyes MAS

  1. If this deal is confirmed, then Syed Mokhtar is now in the airline business in addition to his many and varied businesses. He seems to be the only man who will work wonders for MAS. –Din Merican

  2. God bless Malaysia if this deal is real. The government doesn’t seem to learn from the Tajudin Ramli fiasco.

    Bean.. It is an open secrrt that Mahathir is behind such a deal. Since Tajudin Ramli, and the MAS Air Asia share swap Mahathir has been the man behind the scene.

    The worst will happen ie the whole country will be in one man’s control.

  3. Listen, listen listen

    MSA splat with SIA having only routes and a few prop planes. Today, SQ is much wanted by South China Airlines to transfer its prudent management robustness.
    Circa 1980: SIA embarked onto a strategy to be the region’s best.
    Circa 1986:, Changi II – it went onto next phase of passenger first using AI and datamining to understand passenger needs.
    Circa 2000: Changi III – advanced into what airlines wants; effectively and efficient ground services – resulting in more planes wanting to berth in Changi

    Result of strategy: SQ has more biz class seats and less EY seats than other flag carriers. Higher load as more bizmen wanna fly SQ. Higher profit margin.

    SQ will fly you free from KL/Pg to Sg if you choose to fly SQ long-haul.

    ALITALIA went burst because Always Late in Takeoff Always Late in Arrival.
    Air Asia: Half the price, twice the fun. What fun?, Air stewardess look tired and growcy.
    MAS: Air stewardess nice and friendly like my 40yo aunty…wakaka.

  4. MG
    Hey MAS stewardesses are nice people that is if you fly First Class. Don’t take it out on them for MAS management failure.
    MAS may also end up as SABENA – Such A Bloody Experience Never Again.
    At least KLM is prepared Kalau Lambat Maaf
    Even QANTAS Quite A Noisy Trip And Slow is doing better than MAS.
    How about our Asean neighbor GARUDA Great and Reliable Under Dutch Administration is now a leading airline.
    MAS may soon go the way of TWA The Worst Airline

    Guess there’s still money to be made from MAS. Haven’t finished plundering it. First was MAS Golden Shop, then the Flight Kitchen Brahim Sky Chef and the fuel buy from Petron. Wonder where’s the money from this time?

  5. Bean, you’ve been away too long..
    Heck this ‘Sayyid flur’ is all over the place and we poor soul’s are just plain jealous, ‘cuz believe it or not, we are literally eating rice, sugar and what not, outta his hands. Monopoly is a dirty word. Here’s what Tony Pua says:

  6. MAS has been poorly managed by some airline morons for many years. While other airlines employed capable people with excellent track record in the industry, we keep employing young green horns — only to make it loosing more money year after year. Just look at some airlines in Middle East countries or our neighbor Thai Airways. Eitihad, Emirates, Gulf Air and even Saudi Air are making profit despite facing stiff competition and escalating costs. If MAS is taken over by Syed Mokhtar, MAS is heading for another economic and business disaster.

  7. Syed Mokhtar like a Python.Let hope BN win the election.If PKR win,Syed Mokhtar need a super jet to ran away from KL.

  8. “Tajuddin who was closely linked to former Finance Minister Daim Zainuddin was the poster boy for Malay entrepreneurs.”

    Today he is a posterboy for gays in L.A. and could be seen in Blue Oyster Club in Semper fi’s neck of the woods.

  9. Why not ? They do learn from the Tajuddin Ramli Fiasco – And so, they have to do all over AGAIN ! Which is, a better & more efficient way of Siphonage . Actually they did well there, by looting of RM 8 B ” real ” profits, to make the Accounting appear as ” Losses “….. ; And poor TR had to suffer the full brunt of the Law , which in the end fizzled off, just so that public is appeased and the ” Loss ” all but forgotten….
    It tried again after that re the EMAS- Air Asia share Swap deal, but backfired or something, or else Someone became too smart….

    Actually, HOW CAN a National Carrier suffer ‘ Losses ‘ when its loaded with EMAS, unless its ” DESIGNED ” to show Losses, by under=counter deals in terms of ‘ Black Money ‘ disappearing into thin air. Watch out, same modus operandi for Proton deal….as with other deals like Forex Loss, TNB deals with IPPs , and all other Peee$$$$…….? what more EMAS ?

  10. People still believe its Syed Mokhtar doing these things? Long term fuel subsiides? Who else would have the gall to propose something like this?

  11. ALITALIA, QANTAS, SABENA, etal. How abt those folks in the sub continent? PIA Please inform Allah, AIR INDIA Allah informed, as part of the Doa before takeoff.

  12. UMNO outsources all sorts of sauces – some ready to cook, others in the raw. Perkasa and its ilk are sort of mentah, but useful for demonology and spells. Cookery requires a master chef and it ain’t this Tan Sri flur, who merely flaunts it as the ONE presenter.

    Surely, the average Malay is overawed by this Arab-Malay hybrid of immense capability as they are connoisseurs of parochialism and masochism! That’s what Feudal Umno believes in anyway..

  13. TDM does not trust anyone in UMNo anymore, except Syed Mokhtar.
    Not to worry to much because what have happened to Marcos wealths will same happen to TDM. Eventually all the accumulated wealth will be owned by Swiss @ Jews bankers and use back to finance the American dreams.

  14. Semper

    MH cabin crew much nicer than other airlines incl SQ and ThaiAirways. They have more natural unhurried smiles.

    Long long ago we few Aeroflot as budget students to London. Stop over Moscow. They hurried us into corner to wait and we were guarded by few few very big fierce looking aunties with submachine guns. Girls were terrified. Cant erase those thoughts off our minds.

    Seriously, not difficult to turn around MAS. Matter of want to or don’t want to. Ask Tony Fernandez team of musicians to do the job would be better.

  15. As a Malay, I am sad when you all critcize Syed Mokhtar. Why not? If he can turn-around MAS, then he should be supported. You all are so racists. When it is YTL or Tony Fernandes or Ananda Krishnan, all are okay. It’s your bad attitude which made DEB very hard to achieve for the Malays.

  16. Turn-around what? Makchik, this shit has been repeating itself again and again. Makchik, you forget that Tony pulled out when the shit hit his door and now forced to relocate to Jakarta because AirAsia will collapse with it.
    It’s another way to bailout MAS and made somebody rich along the way. It’s all old school to Malaysian now.

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