Transmile mandates Kenanga IB to search for investors

Saturday, May 28, 2011

SUBANG JAYA: TRANSMILE GROUP BHD, which was recently delisted, has mandated Kenanga Investment Bank Bhd to look for potential investors to inject funds into the ailing cargo airline, said its managing director Liu Tai Shin.

The group is hopes the entry of new investors would help in its turnaround, as it has been recording losses since 2007. It made some progress on its debt restructuring by disposing four of its wide-body aircraft to Federal Express Corp for US$66.99 million or RM200.06 million.

However, Liu said on Friday, May 27 the debt revamp was stalled by the lawsuits faced by the group.

The group risked being wound up by Malaysian Trustees Bhd which represents the interest of five medium-tern note (MTN) holders who are collectively owed RM105 million. In April last year, Malaysian Trustees filed a petition to wind up Transmile after it failed to honour its obligations.

“If they had agreed to allow us to continue, it would have allowed the company to invite potential new investors to come in to participate in the redevelopment of Transmile. But because the banks are falling with us, one particular group, so we are a little bit stalled,” he said after the shareholders meeting.

Liu said business is usual at Transmile group after it has been de-listed. The group will continue operational and serve its customers with the board of directors and the management team at its front wheel, while Kenanga Investment Bank would be looking for the new investors to turn around the company.

“The delisting has nothing to do with our business operation. This is just like previously we’re on the premier league, but now we’re on the second division. But the football team is here, we’ve got our work to do,” he said.

Liu added the group was approached by quite a number of interested parties, but declined to elaborate.

He said the potential new investors would have to be interested in the business and have the financial capabilities to take it to the next level.

“We have not identified any particular institution, we have already worked out the process how we want to tackle the invitation. The merchant banker has been appointed to handle this, so they will be dealing with queries,” he explained.

Liu also rejected the rumors for a management buy-out to occur, and insist that is not the priority of the board of directors.

On the positive note, the group’s chief operating officer Robert John Hyslop said that outlook for the industry is positive, as survey done by aviation association such as the International Air Transport Association (IATA) and aircraft makers Boeing Co. and Airbus SAS suggest the air cargo movements in Asia Pacific to be the fastest growing geographical segment in the aviation industry.

The group has a fairly good mix of revenue streams as most of its business segments are profitable such as flight chartering, leasing and selling cargo capacities to freight-forwarders agents.

However, according to Hyslop, the cargo capacity business was fluctuating in line with the movement of the fuel price, which makes a very major part of the business. Last year, the cargo capacity business charted a high growth rate of more than 60%, he said.

“I think we got a good mix of revenue streams where we are not that type of airline that will go out and prospect for new business without thoroughly researching and understanding the market and our customers,” he said, adding that the airline industry in Asia Pacific is poised for a good growth rate of between 5% and 6%, and acknowledging that Transmile will be benefitting from such growth.


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