KUALA LUMPUR (Oct 23): Capital A Bhd (KL:CAPITALA) said it had terminated an agreement with Aetherium Acquisition Corp meant to pave the way for it to inject its AirAsia brand management business into the Nasdaq-listed special purpose acquisition company (SPAC) for US$1.15 billion (RM5.0 billion).
In an announcement, Capital A said it called off the deal because Aetherium had received a delisting notification from Nasdaq's hearing panel in June.
The delisting notification follows Aetherium's failure to comply with certain Nasdaq listing rules, including meeting minimum market value of US$50 million, and having at least 400 shareholders.
Aetherium is appealing against the notice, but Capital A still had the right to terminate the agreement under the terms and conditions of the agreement, it said.
"After much due consideration by the board, the board has decided to invoke its right to terminate the business combination agreement after considering, among other things, the risk and impact of Aetherium being formally delisted pursuant to the delisting determination," Capital A said.
Capital A had proposed to unlock value of the branding business, Capital A International (CAPI), as part of its initial plan to address its negative equity position and exit its Practice Note 17 status.
However, the CAPI spin-off is no longer a priority, Capital A chief executive officer Tan Sri Tony Fernandes told The Edge in a recent interview, as a separate proposal to dispose of its aviation unit to sister company AirAsia X Bhd (KL:AAX) is found to be sufficient to address the equity position.
This month, minority shareholders of both Capital A and AAX have given the nod for Capital A to dispose of AirAsia Bhd and AirAsia Aviation Group Ltd to AAX, for a combined value of RM6.8 billion in RM3.8 billion worth of AAX shares, and RM3 billion in debt novation from Capital A to AAX.
Separately, Capital A on Wednesday announced its regularisation plan proposal, which entails undertaking RM6 billion in share capital reduction to set off its accumulated losses.
Capital A had accumulated losses of RM12.87 billion at end-June, with a negative total equity position of RM11.24 billion.
Shares of Capital A traded up two sen or 2.05% at RM1 at the time of writing on Wednesday, valuing the group at RM4.27 billion.