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KUALA LUMPUR (Dec 14): AirAsia X Bhd (AAX) Vice President Datuk Lim Kian Onn spearheads a Special Purpose Vehicle (SPV) to inject at least RM50 million of fresh capital into the low-cost carrier, which will be you are in the middle of negotiating with your creditors the restructuring of debt and liabilities.
AAX announced its capital raising plan that involves a cash call to its existing shareholders to raise up to RM300 million plus the issuance of new shares to new investors to raise an additional RM200 million, roughly two months after the airline revealed its massive scheme. debt and liability restructuring. involving a pronounced haircut for creditors.
However, no shareholder will emerge as a new majority shareholder of the company, to ensure that mandatory general offer obligations will not be triggered, according to the announcement to Bursa Malaysia.
Under the issuance and allocation of shares to new investors, AAX said that the SPV incorporated by Lim will commit a minimum subscription of RM50 million.
In addition to that, the SPV will also have the option to subscribe an additional 15% of the expanded total number of AAX shares after the issuance of rights and subscription of proposed shares.
AAX said it intends to raise a minimum of RM100 million from the proposed rights issue. The airline intends to acquire it through subscription agreements of RM100 million, to be arranged at a later date.
The operator’s share price closed today at 10.5 sen, giving a market capitalization of RM435.56 million.
AAX expects the proposed fundraising exercise to be completed in the first half of 2021.
The low-cost carrier emphasized that the capital fundraising exercise is a critical component of the previously announced comprehensive restructuring and recapitalization plan, and will support the implementation of the group’s revised business plan.
Meanwhile, certain creditors demanded AAX to further reduce the capital stock of the low-cost airline.
As a result, AAX announced that it is reviewing the proposed capital reduction from 90% to 99.9%, which will comprise a reduction of its issued share capital from approximately RM1.53 billion to RM1.53 million. To put things in perspective, the registered capital of RM 100 will be reduced to 10 sen.
In a statement, AAX, which serves the long-haul routes, said that the credit arising from the proposed reduction in capital stock will be used to offset part of the accumulated losses.
Your proposed share consolidation after the share capital reduction, which involves the consolidation of every 10 existing AAX shares in one share, remains unchanged.
AAX noted that its shareholders’ funds will remain in deficit after the capital reduction, but the consolidation of the shares after the capital reduction will provide a platform to seek new funds from existing shareholders.
AAX added that the funds to be raised are suitable for various scenarios “envisioned within our business plan” amid the “changing and dynamic” environment.
However, the company must first obtain approval from its creditors for the debt restructuring scheme, he said, noting that several lessors have intervened in the restructuring proceedings to register their objections to the scheme.
“AAX wishes to reiterate that the debt restructuring plan is a prerequisite for recapitalization of the company by new and existing investors, and a complete reset of the airline is required to provide a platform to rebuild and a vehicle to do so. attractive enough for investors to invest in, “the airline said.
It will continue to interact with creditors and hopes to allay their concerns, AAX said, adding that the alternative to the scheme is a liquidation of the airline with no return to creditors.
After the pandemic, AAX said that a restart with fresh capital and a repositioning of the airline as a regional mid-haul low-cost carrier will provide the best economic returns to creditors in an ongoing business relationship.
“The company has received some indications of interest to invest in a restructured AAX and will similarly continue to interact with these potential investors,” he said.
In October, the airline unveiled a debt and liability restructuring proposal that involves the reconstitution of debts worth RM63.5 billion, including future leases, aircraft purchase commitments and advance sale of tickets for a principal amount of up to 200 million ringgit.
The plan also included the proposed capital reduction, share consolidation, as well as the proposed fundraising exercise.
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