Malaysian aircraft maintenance and modification company Airod is planning a restructuring ahead of a possible initial public offering (IPO) and partial sale to BAE Systems. Malaysia's National Aerospace & Defence Industries (NADI) is planning to increase its stake in Airod from 19% to 100%, and may then sell a 20-40% stake to BAE.
NADI, which already owns 100% of SME Aviation, SME Aerospace and SME Ordnance and 70% of Aerospace Technology System (ATSC), is also planning an IPO on the Kuala Lumpur stock exchange. Airod has abandoned earlier plans to launch its own IPO (Flight International, 24 February-1 March).
"The IPO will happen at the NADI level because it's a bigger level, a better investment," says NADI senior vice-president finance Dato Mohamad bin Sham. NADI expects to submit an application to the securities commission by mid-year seeking a flotation of 200 million shares, or at least 25% of the company, he says.
PGS Industries now owns 90% of NADI, with the government owning the remaining 10%. PGS, owned by Tan Sri Ahmad Johan, also has a majority stake in Airod and is looking to sell some of its holdings to foreign companies and public investors.
NADI companies generate about 400 million ringgit ($105 million) annually in revenues, with Airod accounting for by far the largest share. Airod maintains all military aircraft in Malaysia, except the air force's RSK MiG-29s, which are maintained by ATSC, and the indigenous MD3 Aero Tiga aerobatic trainer, maintained by SME Aviation.
Airod and BAE, already partnered for the maintenance of Malaysia's Hawk trainers, signed a memorandum of understanding last September to discuss a possible equity tie, but talks have progressed slowly. BAE director of Hawk support Alex Findlay says the company will begin conducting due diligence this month and expects to make a decision by mid-year. BAE is only interested in buying a stake in Airod, not NADI, and the proposed IPO has contributed to the delay but has not derailed the deal, he says. "All that concerns us is we want to know who the owners will be," Findlay says. "It is all heading towards a rapid conclusion by the end of June."
BRENDAN SOBIE / KUALA LUMPUR
Source: Flight International
