KUALA LUMPUR (April 25): AirAsia X Bhd (AAX), which will be taking over Capital A Bhd's aviation business, has announced the mechanics of its plan via a bourse filing on Thursday.
It will first undertake an internal reorganisation that involves the setting up of a new company (NewCo) that will take over the listing status of AAX. Existing shareholders of AAX will swap their shares in AAX with shares of the NewCo — AirAsia Group Sdn Bhd — on a one-to-one basis.
Prior to the share-swap, AirAsia Bhd (AAB) will transfer its 12.77% stake in AAX to Capital A.
The NewCo will then acquire Capital A's aviation business — AAB and AirAsia Aviation Group Ltd (AAAGL) — for RM6.8 billion. It will be issuing new shares worth RM3 billion in the NewCo — 2.31 billion shares at RM1.30 each — to acquire AAAGL.
As for AAB, it will acquire it for RM3.8 billion, to be satisfied by assuming RM3.8 billion of the RM3.83 billion worth of debt that Capital A owes AAB.
The balance of the debt Capital A owes AAB is to be settled within one year after the NewCo acquires AAB. Likewise, AAAGL, which owes Capital A RM54.83 million as at end-2023, is expected to settle the debt within one year after NewCo acquires AAAGL.
The deal values the entire equity interest in AAAGL at between RM2.7 billion and RM3.5 billion. AAAGL owns Thai AirAsia, Philippines AirAsia, Indonesia AirAsia and AirAsia Cambodia. As for AAB, which operates AirAsia Malaysia, the deal values its equity interest at between RM3.48 billion and RM4.37 billion.
Pending the acquisitions, the NewCo will issue free warrants on the basis of one warrant for every two NewCo shares held with an exercise price to be determined later, before it undertakes a RM1 billion private placement, with a placement size to be determined by the issue price to be set later.
The bulk of the placement proceeds — RM954.5 million — will be used to fund NewCo’s newly consolidated aviation business, comprising RM450 million to RM550 million for aircraft funding, RM300 million for repayment of AAB’s borrowings, and RM104.5 million to RM204.5 million for working capital.
After the issuance of warrants and placement, the NewCo intends to undertake a reduction of its share capital to RM100 million from RM4.05 billion, by cancelling paid-up share capital that is lost or unrepresented by available assets, to eliminate accumulated losses of RM3.27 billion.
By then, the NewCo's borrowings and lease liabilities are expected to be RM23.27 billion, with shareholders’ funds at RM971.42 million. In contrast, AAX’s borrowings and lease liabilities as at end-December 2022 stood at RM1.06 billion, with shareholders’ deficits of RM285.2 million.
Over at Capital A, the group plans to distribute RM2.2 billion worth of the NewCo shares it is getting to its existing shareholders, based on their respective shareholdings in the group.
“As Capital A intends to distribute RM2.2 billion in value of the distribution shares, the number of distribution shares shall be approximately 1.69 billion new NewCo shares,” AAX said.
AAX also plans to grant Singapore-based Garynma Investments Pte Ltd, the vehicle of former AAX director Datuk Lim Kian Onn, rights to subscribe to 15% of the NewCo's enlarged share base, immediately after the completion of the acquisitions. The subscription option is offered in recognition of Garynma’s past commitment to support the company’s fundraising activities, AAX said.
AirAsia co-founders Tan Sri Tony Fernandes and Datuk Kamarudin Meranun, together with AAB and Tune Group Sdn Bhd, collectively own a 40.1% stake in AAX currently. They (including Tune Live and Tune Air) will end up with a 29.21% stake in the NewCo after the proposed exercises, assuming Garynma takes up the subscription option and the warrants are exercised in full.
Subject to requisite approvals, the proposals are expected to be completed by the fourth quarter of 2024.
Shares in AAX ended three sen or 2.42% lower at RM1.21, valuing the company at RM540.96 million. Meanwhile, Capital A shares closed half a sen or 0.72% higher at 70 sen, giving the group a market capitalisation of RM2.96 billion.
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