KUALA LUMPUR (Aug 28): Capital A Bhd (KL:CAPITALA) said the corporate guarantee for its US$443 million (RM1.9 billion) dual-tranche revenue bond will be valid only until the completion of the disposal of its aviation business to AirAsia X Bhd (KL:AAX).
The corporate guarantee "will only be valid until the disposal of AirAsia Bhd (AAB) and AirAsia Aviation Group Ltd by Capital A to AAX is completed," the low-cost airline said in a bourse filing on Wednesday.
Last Thursday, Capital A announced that it had secured the US$443 million revenue bond to refinance AAB's lease liabilities, cover aircraft and engine maintenance costs, and support its working capital needs.
The private financing will be provided in two tranches. Ares Management Corp and Indies Capital Partners will contribute US$200 million, which will be strategically used to reactivate aircraft grounded during the pandemic. The remaining US$243 million, subscribed by existing aircraft lessors, will be used to refinance current lease liabilities, further strengthening the company's balance sheet.
The revenue bond is backed by corporate guarantees from both Capital A and AAB, as well as various securities from AAB.
AAX announced in April that it would undertake an internal reorganisation involving the proposed disposal of AAB, which operates the Malaysian aviation business, and AirAsia Aviation Group, which manages operations in Indonesia, Thailand, the Philippines and Cambodia, to AAX for RM6.8 billion.
Following this, a new company named AirAsia Group Sdn Bhd was to assume the listing previously held by AAX after a share swap.
However, in July, AAX decided to abort the proposed reorganisation and to instead acquire AAB and AirAsia Aviation Group directly to expedite the takeover.
At Wednesday’s closing bell, shares in Capital A fell by half a sen, or 0.63%, to 79 sen, valuing the group at RM3.38 billion. AAX closed unchanged at RM1.33, giving the company a market capitalisation of RM594.61 million.