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KUALA LUMPUR: The lessor BOC Aviation Limited (Boca) has asked a court to dismiss AirAsia X Bhd’s debt restructuring plan as it rules out a debt-for-equity swap and gives Airbus too much power as a creditor, according to a statement jury presented by one of the best executive shows in Boca.
AirAsia X (AAX), the long-haul unit of low-cost carrier AirAsia Group, has proposed to reconstitute $ 15.3 billion of debt into a principal amount of RM 200 million ($ 48 million) and renounce the remainder.
The airline, which has posted losses since June 2019, said the alternative was to face liquidation without repayment to creditors. He is now seeking court approval to convene a meeting with creditors to vote on the scheme.
In an affidavit filed in Kuala Lumpur High Court on November 26 that Reuters had access to, Boca Chief Executive David Walton said the restructuring was unfair as it canceled 99.7% of claims without offer creditors a shareholding.
Boca became one of Norwegian Air’s major shareholders in May after agreeing with other lessors to convert debt to equity. The airline sought bankruptcy protection last month after failing to obtain further state support.
Walton also questioned AAX’s unfair debt calculations, given that most of the amount was tied to Airbus SE aircraft orders that have not been delivered.
AAX had previously disclosed that Boca had challenged the restructuring, but had not given reasons for it.
“The aircraft purchase commitments cannot be considered as an accurate assessment of the accumulated and crystallized debts,” Walton said in the affidavit supporting Boca’s claim.
In other recent restructurings such as Thai Airways International PCL and Virgin Australia, the main creditors have been current financiers, lessors and suppliers, not order-based aircraft manufacturers.
AAX’s restructuring plan needs the approval of creditors who own at least 75% of the total value of the debt.
A source with direct knowledge of the matter told Reuters that Airbus has almost 75% on its own, which gives lessors relatively little say.
Walton said Boca should be classified as a separate financial creditor for an equipment manufacturer like Airbus, as they had different interests.
AAX did not immediately respond to a request for comment.
Boca declined to comment, saying he was involved in legal action, while Airbus declined to comment, citing confidentiality.
Last month, a British court ordered AAX to pay Boca $ 23.4 million for outstanding aircraft lease obligations. Boca registered the foreign trial in Malaysia last week.
AAX yesterday announced plans to raise US $ 123 million through an issue of rights from existing shareholders and the subscription of shares from new investors.
However, fundraising is dependent on the approval of the restructuring plan and at least a dozen creditors have objected to it. AAX said it will continue to work with creditors to allay their concerns.
