Malaysian Airline System Bhd (MAS) today released a circular to its shareholders, giving details of its proposed capital restructuring plan and renounceable rights issue plan to raise RM3.1 billion.

Under the rights issue, which is to follow its capital reduction plan, it has proposed the issuance of new ordinary shares of RM0.10 each in MAS to raise RM3.1 billion in gross proceeds.

The issue price for the rights share will to be announced at a date closer to the implementation of the rights share issue, it said.

In a filing to Bursa Malaysia today, the national carrier explained that of the funds raised from the proposed rights issue, some RM1.33 billion will be used to fund working capital and RM986.85 million would be spent for capital expenditure.

The company will also utilise the remaining RM777 million to pare down its borrowings, which stood at RM8.089 billion as of Sept 30, 2012.

MAS had last month received a one-month extension from the regulator on its capital restructuring plan and rights issue.

“We intend to use part of the proceeds raised from the proposed rights issue for general working capital purposes, including but not limited to general corporate purposes, aircraft lease rentals, fuel expenses, aircraft maintenance expenses, payments to creditor and other day-to-day expenses,” MAS said.

Under its proposed capital restructuring plan, the national airline will be undertaking a par value reduction of 90 sen of its shares from RM1.00 to 10 sen.

It has proposed to reduce its existing issued and paid-up ordinary share capital from RM3,342,165,240 comprising 3,342,156,240 ordinary shares of RM1.00 each to RM334,215,624 comprising 3,342,156,240 ordinary shares of RM0.10 each.

The par value reduction will be used to reduce the accumulated losses of RM8.19 billion as of Sept 30, 2012.

An extraordinary general meeting of the company has been slated to be held at MAS Academy, Petaling Jaya on March 5, 2013, to pass four resolutions, namely on the  proposed par value reduction, reduction of the share premium account of MAS, amendment to the memorandum and articles of association of MAS to facilitate the change in the par value reduction, and the proposed renounceable rights issue of new ordinary shares of RM0.10 each in MAS to raise RM3.1 billion.

- Bernama