ISTANBUL AIRPORT BUY: MAHB major shareholders agree to rights issue to fund RM1.18b acquisition, sources say
MALAYSIA Airports Holdings Bhd’s (MAHB) major shareholders have agreed on a cash call to help the airport operator fund the RM1.18 billion acquisition of a 40 per cent stake in Istanbul’s second largest airport, sources said.
They said Khazanah Nasional Bhd and Permodalan Nasional Bhd, which collectively own nearly 60 per cent of MAHB, had given their nod for a proposed rights issue.
“All the major shareholders, except the Employees Provident Fund, have agreed to the rights issue,” a source told Business Times. Khazanah owns 36.6 per cent of MAHB shares, PNB has 20.8 per cent while the EPF has 13.1 per cent.
MAHB on Thursday announced that it had exercised its right to buy the remaining 40 per cent stake it does not own in Istanbul Sabiha Gokcen International Airport Investment Development and Operation Inc (ISG) and LGM Havalimani Isletmeleri Ticaret ve Turizm AS for €285 million (RM1.2 billion) from Turkey’s Limak Group.
It will gain full control of the Sabiha Gokcen International Airport upon completion of the deal.
“Despite the weak market conditions, MAHB will make the rights issue sooner rather than later as it can’t wait any longer. The challenge now is valuation, which may be low due to the weak stock market conditions,” the source said, adding that MAHB would also use internal funds to raise the €285 million.
MAHB chief executive officer Datuk Badlisham Ghazali said yesterday several funding options were on the table, including debt and equity as
well as its RM2.5 billion sukuk issue announced a few months ago.
“MAHB is currently deliberating on the most appropriate funding structure for the acquisition and further details will be announced once it is
finalised,” Badlisham said at a press conference in Sepang yesterday.
He said the acquisition was expected to boost its overseas revenue contribution to about 32 per cent starting next year, from less than three per cent currently.
The figures are based on ISG’s average annual revenue of about €200 million, which will be fully recognised by MAHB when the consolidation exercise is completed in the first quarter of next year.
MAHB saw its revenue strengthen 15.5 per cent
last year to RM4.1 billion from RM3.5 billion in 2012
Badlisham said ISG, which has been registering losses since it started operations five years ago, is also expected to turn around in 2016.
ISG’s losses had, however, narrowed by fivefold to €20 million last year from €100 million in 2010, fuelled by encouraging passenger traffic, which grew to 18.8 million from 4.4 million in 2008, he said.
“We expect to complete the acquisition by January or February next year, after which we will start consolidating 100 per cent from then onwards. We believe ISG will start making profit from next year onwards, if not break even. The very latest should be by 2016,” he added.
AmResearch Sdn Bhd analyst Wong Joe Vuei believes MAHB will opt for an equity-raising exercise to raise the bulk of the money for the acquisition.
“If the acquisition is funded fully via borrowings, this will bring its (MAHB’s) gross gearing to 1.22x upon the completion of the exercise. This is very close to MAHB breaching its debt covenant of less than 1.25x. As such, we believe an equity-raising exercise may be likely,” Wong wrote in a report.