KUALA LUMPUR (May 22): Medium-haul low-cost airline AirAsia X Bhd (AAX) has proposed to place out 32.26 million new shares, equivalent to 7.78% of its total issued shares, to AHAM Asset Management Bhd, AIIMAN Asset Management Sdn Bhd and Lavin Group Sdn Bhd at an issue price of RM1.55 per share, which works out to a total of RM50 million. The airline intends to use the proceeds for working capital.

In a filing with Bursa Malaysia on Monday (May 22), AAX said it had entered into three conditional share subscription agreements with each of the subscribers. However, the placement shares will be issued in a single tranche.

The new share offering will see Lavin Group subscribing to 16.13 million or half of the placement shares for RM25 million, while AHAM will take 12.91 million or 40% for RM20.01 million and AIIMAN the remaining 3.22 million or 10% for RM4.99 million.

"The subscription price represents a discount of 15.96 sen or 9.34% to the five-day volume weighted average market price (VWAP) of AAX shares of RM1.7096 per share on May 19," said AAX.

"The proceeds amounting to RM49.45 million will be used to fund the working capital requirements of the group, which include aircraft activation and maintenance costs and other operating expenses such as leases and insurance," it added.

The airline had previously reduced its fleet size to nine aircraft from 24 over the course of its operational hibernation amid the Covid-19 pandemic. Between March 2022 to May 2023, AAX has added eight aircraft to its fleet, bringing its total fleet size to 17 aircraft, with 11 fully activated and operational to-date. It said it is working towards having more aircraft fully activated and operational by the end of the year.

Meanwhile, Lavin Group is controlled by businessman Calvin Lau Chuen Yien. It has a wide range of business interests in various sectors including property, stock trading, vessel chartering, fishery and aviation.

AHAM, which is 63% owned by private equity fund CVC Capital Partners Asia V Ltd and 27% owned by Nikko Asset Management International Ltd, has RM77 billion assets under management as at February.

As at May 19, AHAM and the funds managed by AHAM collectively hold 716,300 AAX shares, representing 0.17% of total issued AAX shares. Upon completion of the proposed placement, AHAM and the said funds will collectively hold 13.63 million shares in AAX, equivalent to 3.05% of the enlarged issued AAX shares.

Both Lavin Group and AIIMAN, a wholly-owned Shariah investment arm of AHAM, currently do not hold any AAX shares.

In October 2021, AAX was classified as a Practice Note 17 (PN17) company after its external auditor Messrs Ernst & Young PLT expressed a disclaimer of opinion in the airline’s audited financial statements for the 18-month financial period ended June 30, 2021.

However, the airline had managed to turn around its financial performance from loss-making to registering two consecutive quarters of profit of RM25.09 million and RM153.48 million for the last two quarters ended Sept 30, 2022 and Dec 31, 2022 respectively.

In November last year, AAX's sister company Capital A Bhd had announced that it will combine its AirAsia budget airline business with AAX as part of a corporate restructuring designed to shed its PN17 status. It has yet to announce the regularisation plan.

"While the company continues to evaluate the group’s financial performance as well as the viability of its PN17 regularisation plan, the company proposes to undertake the proposed placement as an interim fund raising measure to bolster its short-term working capital requirements alongside the group’s resumption of operations back to normalcy," said AAX.

"Given the continued recovery of demand for international air travel across the region and the improvement in the Group’s financial condition, the board of directors is of the view that the proceeds to be raised from the proposed placement are adequate to meet the group’s short to medium term financial requirements at this juncture. Notwithstanding this, the group will continuously assess its operations, as well as financial position and condition moving forward. The proposed placement is also expected to provide a better footing for the group to continue to focus on revitalising its existing business," it added.

AmInvestment Bank Bhd has been appointed as the principal adviser and placement agent for the proposed placement. Barring any unforeseen circumstances, the proposed exercise is expected to be completed in the third quarter of 2023.

AAX shares closed to its highest levels in more than three years on Monday to settle up 12 sen or 6.67% at RM1.92, giving it a market capitalisation of RM796.44 million. Its share price has soared 220% so far this year from 60 sen on Jan 3.