KUALA LUMPUR (March 11): Tan Sri Tony Fernandes, chief executive officer of Capital A Bhd (formerly known as AirAsia Group Bhd), has clarified that the group decided not to proceed with a club facility of up to RM500 million under the Danajamin Prihatin Guarantee Scheme as it deemed some of the conditions imposed unreasonable.
"We decided not to proceed with the club facility as we felt some of the conditions imposed were unreasonable. The required approvals from Bursa Malaysia were not within our control and while we did seek for the time extension to provide a regularisation plan, ultimately our application was declined," he said in a statement on Friday (March 11).
Capital A fell into Practice Note 17 (PN17) status on Jan 13 after its application to secure extension for an 18-month relief period beyond Jan 7 was rejected by Bursa. It has up to 12 months to submit a regularisation plan to the regulatory authorities, failing which trading in its securities will be suspended and delisting will follow.
On Thursday, The Edge reported that Capital A was unable to obtain the RM500 million club facility under Danajamin Nasional Bhd as the former was not agreeable to a condition that its co-founders, namely Fernandes and Datuk Kamarudin Meranun, be guarantors for the loan. Both Fernandes and Kamarudin hold a combined 24.64% stake in Capital A through Tune Air Sdn Bhd (12.41%) and Tune Live Sdn Bhd (12.23%).
In the latest statement, Fernandes also gave assurance that both he and Kamarudin were sticking with the group long term.
"Datuk Kamarudin and myself remain committed to Capital A's recovery having been actively involved in steering the group through this crisis day-in, day-out over the past two years. We have also personally injected RM257.3 million — out of the RM974.5 million rights issue that was completed on Dec 31, 2021 — to support the turnaround plan," he said.
"However, while we are willing to provide the personal guarantees requested on top of our previous cash support through the rights issue, such a request for us to guarantee everyone’s exposure is unseemly for a public-listed company considering we are but two among many Capital A shareholders which also includes institutional investors," he added.
Fernandes reiterated that Capital A will continue to explore other financing alternatives more suited to its operations and requirements, while noting that the group’s fundraising strategy remains firmly on track to sustain operations through 2022 and support its airline’s recovery.
“As international borders continue to reopen in all of our key markets, we look forward to returning to pre-pandemic capacity on many of our popular domestic and international routes by the end of this year, in turn returning to profitability and delivering value to our shareholders once again in the near future,” he said.
The RM500 million Danajamin-guaranteed loan was part of RM2.5 billion fundraising exercise for recapitalisation after the airline was hard hit by the Covid-19 pandemic.
In a bourse filing on Thursday, Capital A announced that it will not be proceeding with the Danajamin loan as it was “unable to accept and/or fulfil certain conditions” set by the national financial guarantee insurer.
Danajamin had also requested that Capital A submit a regularisation plan and obtain approval from Bursa to remedy its negative shareholder equity to be above RM40 million and 25% of its share capital or obtain a time extension to provide the regularisation plan from the exchange for the same tenure as the club facility.
Capital A shares closed down 2.5 sen or 3.8% at 63.5 sen on Friday, valuing the group at RM2.64 billion based on 4.16 billion outstanding shares. The stock has declined 21.6% year to date.