By FINTAN NG email@example.com
Paper loss following AMR bankruptcy at RM273mil
PETALING JAYA: Tan Sri Quek Leng Chan, whose family interests include the Hong Leong and Guoco groups, may be looking at an almost complete loss just 3 months after acquiring a 7.3% stake in AMR Corp, the holding company of American Airlines Inc, which filed for bankruptcy on Tuesday.
Quek had acquired 24.4 million shares in AMR through Hong Kong-listed Guoco Group Ltd and related companies.
On its website, Guoco group said investments covering the global capital markets were made in view of enhancing capital value in line with the company’s vision of achieving superior long-term returns for shareholders.
Media-shy: Quek acquired 24.4 million shares in AMR through Hong Konglisted Guoco Group Ltd and related companies.
The United States third-largest airlines went bust and filed for Chapter 11 bankcruptcy after it failed to post full-year profit since 2007 with US$24.7bil in assets and US$29.6bil in debt, according to news reports.
Other major shareholders of the airline included Primecap Management Co, a Pasadena, California-based investment firm with 12.30% stake, ICC Capital Management from Orlando, Florida with 7.49% stake and Capital World Investors with 7.40%.
Although it is unclear at what price the cigar-chomping Quek had acquired the shares, based on the closing price on Aug 15, the shares would have been worth US$92.2mil (RM275.21mil based on the exchange rates then) or US$3.78 per share.
On Tuesday, AMR’s share price closed at 26 cents, down 93.12% since Aug 15.
Therefore, the media-shy Quek, known as a super high-roller who frequents casinos in Las Vegas according to reports, may be looking at paper losses of US$85.88mil (RM273mil as of yesterday’s exchange rate).
American Airlines jets take off and land at Dallas Fort Worth International Airport in Dallas, Texas, USA, 29 November 2011. American Airlines, a part of AMR Corp. the nation’s third-largest carrier, filed for Chapter 11 bankruptcy reorganization. – EPA
His potential losses came on the heels of another turbulent period for the airlines industry which has barely recovered from the global financial crisis of 2008/2009.
The International Air Transport Association director-general and chief executive officer Tony Tyler had said that 2012 would be a tough year although the industry’s net profit forecast for this year had been revised to US$6.9bil from US$4bil in June.
He said this was due to “still exceptionally weak” profitability, with net margins at 1.2% versus the industry’s US$594bil in revenue.
Meanwhile, Hong Leong Financial Group Bhd posted a 22.11% drop in net profit to RM252.20mil for the third quarter ended Sept 30 compared with the quarter a year ago after taking into consideration a surplus transfer of RM175mil. Revenue for the quarter under review rose 19.04% to RM919.67mil.