KUALA LUMPUR (Jan 13): The High Court here has fixed Jan 24 to hear the petition filed by AirAsia X Bhd (AAX) last month seeking the court's order for a reduction of 99.9% of its issued share capital. The long-haul low-cost carrier received shareholders' nod for the proposed exercise at its extraordinary general meeting in June last year.
It is proposing to reduce its share capital of RM1.534 billion to RM1.534 million, comprising 4.148 billion shares. It is also seeking the amount of RM0.00037 be deemed paid-up for each share from the date of the court order.
The airline is also seeking an order from the court that the notice of the terms of such resolution and registration be published in an English daily (The Star) within seven days of the court order.
AAX filed the petition through its solicitors Foong & Partners on Dec 17 last year, in court documents sighted by theedgemarkets.com.
The date was decided on Thursday (Jan 13) by Justice Datuk Ahmad Fairuz Zainol Abidin, in the hearing of enclosure 15 of AAX summons to directors application, for the High Court to fix a hearing date of the petition and to ensure provisions under Section 116(2) of the Companies Act 2016, and the requirements of Rule 5(2) (b) and Rules 7 to 16 of the Companies (Reduction of Capital) Rules 1972 are followed.
According to AAX's financial period ended June 30, 2021, it had current assets of RM350.02 million and current liabilities of RM36,073.9 million (or RM36.0739 billion). The company however had non-current assets of RM2,142.22 million (RM2.14222 billion).
Section 116 of the Companies Act pertains to a reduction of share capital by the court.
A capital reduction is the process where a company decreases its shareholder equity via share cancellations or share buy-backs.
In the court documents, AAX stated that the number of employees declined from 2,364 on Dec 31, 2019, to 948 on Aug 31, 2021. The Covid-19 pandemic has greatly affected air travel and hence adversely affected businesses worldwide.
The airline on Dec 14 last year said that pursuant to representations made by certain creditors, it intended to revise the proposed reduction of 90% of the issued share capital of the airline to 99.9% of the issued share capital.
The credit arising from the proposed share capital reduction will be used to offset part of the airline's accumulated losses.
The proposed share capital reduction forms part of AAX's corporate restructuring plan, which includes the consolidation of every 10 existing AAX shares into one share.
Shareholders' funds after the capital reduction will remain negative, but the airline has maintained that the consolidation of shares post-capital reduction will provide a platform to seek fresh funding from existing shareholders.
Under its fundraising, AAX is proposing to raise up to RM500 million, comprising both a rights issue of up to RM300 million from existing shareholders and a share subscription of shares of up to RM200 million from new investors.
On Dec 16, 2021, AAX obtained the court's sanction to its RM33.65 billion debt restructuring plan. Under the restructuring plan, it will see its outstanding dues being written off by a whopping 99.5% to RM168 million. This effectively reduced the airline's net gearing to zero. As at June 30, 2021, it was sitting on a net debt of RM6.7 billion while it had a shareholders' equity deficit of RM33.58 billion.