Friday 29 Mar 2024
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This article first appeared in The Edge Malaysia Weekly, on December 21 - 27, 2015.    

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DESPITE being mired in huge losses, AirAsia X Bhd managed to raise RM391 million through the issuance of 1.78 billion shares at 22 sen each on the basis of three new rights shares for every four existing shares held by its shareholders.

According to CIMB Investment Bank, the deal was launched in challenging market conditions with AAX’s share price falling 6.9% from the announcement date of the issue price and entitlement basis until the eve of the ex-date of the rights.

Following its initial public offering in July 2013, the long-haul, low-cost airline required further capital injection to fund its general working capital amidst myriad challenges in a tough operating environment. CIMB IB led the rights issue as the sole principal adviser and managing and joint underwriter.

The 22 sen per rights share was priced at a 50% discount to AAX’s five-day volume weighted average price and 37% discount to its theoretical ex-rights price.

The rights issue came with 889.5 million free detachable warrants, which would enable AAX to raise RM409 million based on an exercise price of 46 sen for each warrant and assuming full exercise of the warrants when they expire in five years. Shareholders who subscribed for the rights issue were entitled to one warrant for every two rights shares.

The rights issue achieved an oversubscription rate of 14.9%, showing investor confidence in the AirAsia brand despite challenging market and economic conditions. The rights shares were listed on Bursa Malaysia on June 11, 2015.

However, it was not the best of years for the aviation industry, given the ample capacity that led to fierce competition among the local airlines. AAX’s net loss widened to RM561.8 million in the nine-month period ended Sept 30, 2015, from RM350.9 million previously.

The stock closed at 18.5 sen last Wednesday, having fallen 66% over the year. Since the listing of the rights shares, AAX’s share price has declined 19.7% and is currently way off the airline’s RM1.25 debut price.

 

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