RAM Ratings to monitor developments at MAHB and UEM following pre-conditional offer announcement

Published on 21 May 2024.

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On 15 May 2024, Malaysia Airports Holdings Berhad (MAHB or the Group) received a pre-conditional voluntary offer from a consortium – comprising vehicles of Khazanah Nasional Berhad (via a subsidiary of UEM Group Berhad (UEM)), the Employees Provident Fund (EPF), Abu Dhabi Investment Authority (ADIA) and Global Infrastructure Partners (GIP) – for all the shares in the Group that they do not already own, for RM11 per share. The deal structure and details relating to the proposed privatisation of MAHB are not yet available although the Government via the Ministry of Transport has announced its support for the privatisation plans and affirmed its view of MAHB as a strategic asset of the Government. Upon full acceptance of the offer, collective Government interest in MAHB will increase via two government-linked entities (GLEs), with Khazanah’s ownership increasing from 33.2% to 40.0% and EPF’s from 7.9 % to 30% (Figure 1).

Figure 1: Corporate structure pre- and post-full acceptance of voluntary offer

Notes:
Shaded boxes reflect the joint offerors.
* Shareholding percentage if offer condition is met
^ Shareholding percentage post-subscription of shares in Gateway Development Alliance Sdn Bhd within 10 business days of pre-conditional offer

RAM presently has outstanding ratings on the various bonds and Sukuk issued by Khazanah, UEM and MAHB (Table 1). Based on our preliminary assessment, we do not expect any immediate impact to MAHB’s stand-alone credit profile as the execution of business plans continues uninterrupted during this six-month period. Extraordinary government support for the Group is anticipated to remain highly likely under RAM’s criteria for GLE, providing a rating uplift. 

The impact on UEM’s stand-alone credit profile however, is uncertain at this juncture. We will closely monitor UEM’s overall performance as it invests in green industries – a mandate entrusted to them as one of the key enablers under the government’s decarbonisation agenda – and reassess its ratings once further details about the stake transfer from Khazanah to its subsidiary, and funding for the eventual offer become available. Our ongoing evaluation of UEM’s credit quality will also consider any change in strategy given this new development and will take the appropriate rating action when there is greater clarity in all these areas; UEM’s ratings currently benefit from a high likelihood of extraordinary government support.

The issue ratings of both these entities remain unchanged at this juncture, given the preliminary nature of the takeover offer and what it may entail. Currently a pre-conditional voluntary offer, an offer will be made to MAHB’s board when the joint offerors have satisfied or waived the pre-conditions that relevant authorities in several countries agree the corporate exercise would not infringe any regulation. Upon completion of the exercise, MAHB shall be delisted from the local stock exchange.

Table 1: Issue ratings of Khazanah, UEM and MAHB

* Funding vehicles of Khazanah

 

Analytical contacts
Karin Koh, CFA 
(603) 3385 2508
karin@ram.com.my

Thong Mun Wai 
(603) 3385 2522
munwai@ram.com.my

Media contact
Sakinah Arifin
(603) 3385 2500
sakinah@ram.com.my

 

The credit rating is not a recommendation to purchase, sell or hold a security, inasmuch as it does not comment on the security’s market price or its suitability for a particular investor, nor does it involve any audit by RAM Ratings. The credit rating also does not reflect the legality and enforceability of financial obligations.

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