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KUALA LUMPUR (6 October): AirAsia X Bhd (AAX) has submitted a massive debt restructuring proposal in which the airline would reconstitute debts worth RM63.5 billion, including future leases, aircraft purchase commitments and advance sale of tickets, in a capital amount of up to RM200 million.
In addition to a steep cut for creditors, the long-haul low-cost carrier also proposed a 90% capital reduction of its issued share capital to offset its accumulated losses. This means a reduction of RM1.38 billion of its share capital.
AAX has also proposed share consolidation to combine every 10 shares into one.
The cash-strapped airline did not propose any cash calls to recapitalize its balance in the announcement.
However, the group said it intends to raise up to RM500 million, including by applying for a government guaranteed loan under the Danajamin PRIHATIN Guarantee Scheme and / or by raising funds from capital providers.
As of June 30, AAX’s total loans were RM6.09 billion. Meanwhile, its current lease liability amounted to RM 856.41 million, while its non-current liabilities stood at RM 4.95 billion.
In a stock filing, AAX said the principal sum of RM200 million is an amount that the group’s future operating cash flow can accommodate, and is paid annually over a period of up to five years through three equal payments from the third the fifth anniversary of the implementation of the proposed debt restructuring.
“The amount of the debt settlement will not be guaranteed and will have an interest rate of 2% per year payable in arrears, as of the anniversary of the implementation date of the proposed debt restructuring.
“For airline and travel agent customers, they will receive extended validity travel credits for future travel or purchase of seat inventory,” AAX said in the announcement to Bursa Malaysia.
AAX will streamline its network plan (by suspending and / or terminating unprofitable and / or immature routes), shift its focus from market share to sustainability and performance to drive profitability, and focus on routes that have a proven performance and charging performance.
The board of directors has appointed Mercury Securities Sdn Bhd as lead advisor for the proposed corporate restructuring.
AAX’s share price closed today at 5 sen, giving it a market capitalization of RM 207 million.
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