KUALA LUMPUR (April 9): The negotiation period for Capital A Bhd’s sale of AirAsia's aviation business to AirAsia X Bhd (AAX) has been extended for the second time to April 30, 2024, the two listed companies said.

Capital A and AAX have mutually agreed to extend the negotiation period for the sale of the aviation subsidiaries, namely AirAsia Bhd (AAB) and AirAsia Aviation Group Ltd (AAAGL), their respective filings showed.

The negotiation period, which was initially set for two months, was first extended to April 15.

AAB runs AirAsia group’s Malaysian airline business, while AAAGL houses the group’s operations in Thailand, Indonesia, the Philippines and Cambodia.

The proposed sale of the airline business by Capital A to AAX is a precursor for Capital A to present a regularisation plan to Bursa Securities by June 30, to exit the Practice Note 17 status amid its negative total equity position.

Sale of AAB and AAAGL, which sources said Capital A is valuing at around RM5 billion, will result in a merger of the AirAsia Group’s airlines business within AAX. AAX operates the group’s medium- to long-haul flights to Australia, East Asia and Central Asia.

Capital A is also in the midst of injecting its brand management business, which holds the ownership of the AirAsia brand, into a US-listed special purpose acquisition company (SPAC) for US$1.15 billion, (RM5.46 billion) to regularise its balance sheet position.

As at end-December, Capital A’s current liabilities stood at RM14.87 billion, against current assets of RM2.37 billion. Total equity stood at RM10.47 billion, with accumulated losses of RM10.49 billion.

Capital A has yet to reveal the structure of the aviation business sale deal with AAX, which completed its own restructuring plan in 1Q2022. The restructuring sees AAX, hit by the pandemic alongside the entire aviation industry, paying just 0.5% of debt owed to scheme creditors.

As at end-December, AAX had net current liabilities that had improved to RM228.35 million from RM349.33 million a year ago, while shareholders' equity of RM129.69 million was up from negative equity of RM285.2 million at end-2022.

AAX’s largest shareholders include Tune Group Sdn Bhd (16.54%), AirAsia Group (12.77%) and Datuk Kamarudin Meranun.

Shares of AAX last traded at RM1.30, valuing the group at RM581.19 million. The counter is down 30% this year.

Capital A shares last traded at 70 sen, giving the group a market capitalisation of RM2.98 billion. The shares are down 15% this year.