KUALA LUMPUR (Oct 3): AirAsia Bhd, the aviation arm of Capital A Bhd, has secured a five-year term loan of up to US$150 million (approximately RM708.46 million). 

The loan will be used to fund its aircraft and engines maintenance and working capital, according to the bourse filing by Capital A.

The term loan was secured shortly before Capital A is due to submit its regularisation plan to the stock exchange on Oct 7.

In a bourse filing, Capital A Bhd said the term loan was granted by a financial institution with a corporate guarantee from Capital A, which shall remain throughout the term of the term loan.

“The board of directors of the company, having considered all aspects of the term loan, is [of] the opinion that the term loan is in the ordinary course of business and is in the best interest of the group,” it said.

As at June 30, 2023, Capital A’s total borrowings stood at RM724.97 million, while its cash balances stood at RM735 million, according to its latest financial statement.

Capital A slipped into PN17 status in January 2022, after its external auditor Messrs Ernst & Young PLT raised material concerns about the airline’s ability to continue as a going concern in its audited financial statements for the financial year ended Dec 31, 2019, and as its shareholders’ equity fell below 50% of its share capital.

Capital A’s shares dropped 1.5 sen to 96 sen on Tuesday, valuing the group at RM4.05 billion. The stock has climbed by 47.7% year-to-date.