Steep discount looms for AAX rights issue price

(Photo by Mohd Suhaimi Mohamed Yusuf/The Edge)

(Photo by Mohd Suhaimi Mohamed Yusuf/The Edge)

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KUALA LUMPUR (April 26): AirAsia X Bhd (AAX), which is planning a RM500 million fundraising exercise, intends to provide a steeper discount to its rights issue price to encourage the take-up of the cash call.

The troubled carrier is planning to raise up to RM300 million via a cash call from its existing shareholders, and up to RM200 million from a placement exercise for new investors. This is on top of a share capital reduction exercise and a proposed restructuring of some RM2 billion in liabilities.

“The board intends to fix the rights issue price at an indicative discount of between 30% and 55% to the theoretical ex-all price (TEAP) of AAX shares after taking into consideration the need to price the rights shares at an issue price deemed sufficiently attractive to encourage subscription to the rights shares,” said AAX in a filing today.

“After further deliberation, the issue price of the additional subscription shares will be revised to be based on the higher of: a) the rights issue price; or b) 25% of the five-day volume weighted average market price of AAX shares up to and including the date immediately preceding any exercise of the subscription option,” the airline added.

The latter, it said, is subject to adjustment if any alteration is made to the share capital at any time during the subscription period for the additional subscription shares.

In October, the airline unveiled a debt and liabilities restructuring proposal involving the reconstitution of RM63.5 billion worth of debts, including future lease rentals, aircraft purchase commitments and advanced ticket sales into a principal amount of up to RM200 million.

It also includes a share capital reduction exercise, which entails a higher reduction of 99.9%, from 90% proposed previously. This will reduce the share capital to RM1.53 million from RM1.53 billion currently.

Meanwhile, the proposed subscription to new shares by new investors will see AAX deputy chairman Datuk Lim Kian Onn spearheading a special purpose vehicle (SPV) to pump in at least RM50 million in the exercise.

On March 17, the long-haul low-cost carrier announced that it had secured a three-month restraining order against its creditors as it deliberates further on its restructuring plan.

Shares in AAX traded down half a sen or 5.56% to 8.5 sen at the noon market break, valuing the group at RM352.59 million.

Lam Jian Wyn