KUALA LUMPUR (October 6): AirAsia X Bhd (AAX) unveiled a massive debt restructuring proposal in which the airline will replenish RM 63.5 billion in debt, including future leases, commitments to purchase of aircraft and advance ticket sales, in a principal amount of up to RM200 million.
In addition to a steep discount for creditors, the low-cost long-haul carrier has also proposed a capital reduction of 90% of its issued share capital in order to offset its accumulated losses. This means a reduction of RM 1.38 billion in its registered capital.
AAX, which slipped to the brink of insolvency as the Covid-19 pandemic added to its financial woes, also proposed a stock split to combine all 10 shares into one, according to a stock exchange filing.
The cash-strapped airline offered no cash call to recapitalize its balance sheet in the announcement.
However, the group said it intended to raise up to RM500 million, including applying for a government-guaranteed loan under the Danajamin PRIHATIN guarantee program and / or raising funds from donors.
As of June 30, AAX’s total borrowings were RM 6.09 billion, while its current lease liabilities were RM 856.41 million and its non-current liabilities were RM 4. 95 billion RM.
AAX’s proposal comes just days after the Malaysian national airline, Malaysia Airlines Bhd, revealed on October 2 that it had reached out to its key donors, creditors and suppliers, seeking significant discounts, as part of the move. ‘an urgent restructuring exercise.
Similarly hard hit by the pandemic, the group’s holding company Malaysia Aviation Group had said in a letter to donors that the group was unlikely to make the payments due after November, unless it received more funding from the government. state fund Khazanah Nasional Bhd.
Meanwhile, in its announcement today, AAX said that the main sum of RM200 million is an amount that the future operating cash flow of the group can accommodate, and is payable annually over a period of up to ‘to five years via three equal payments from the third to fifth anniversaries of the implementation of the proposed debt restructuring.
“The debt settlement amount will not be guaranteed and will carry an interest rate of 2% per annum payable in arrears, commencing on the anniversary of the implementation date of the proposed debt restructuring.
“In the case of airline and travel agent customers, they will receive travel credits with extended validity for future trips or the purchase of stock of seats,” AAX said in the announcement in Bursa. Malaysia.
Tune Group Sdn Bhd, which is the investment vehicle owned by Tan Sri Tony Fernandes and Datuk Kamarudin Meranun, is the main shareholder of AAX, holding a 17.83% stake. AirAsia Group Bhd owns 13.76%, while Kamarudin has a direct stake of 8.94% and Fernandes has a working stake of 2.69%.
Its director Datuk Lim Kian Onn, who will assume the post of vice-president tomorrow to lead the restructuring of the airline, has a 4.24% stake.
AAX has stated that it will streamline its network plan (by suspending and / or terminating unprofitable and / or immature routes), shift from market share to sustainability and efficiency to increase profitability, and will focus on routes that have proven their load and performance. performance.
The carrier has suffered losses for most of the years since listing in 2013. (see graph)
For the six-month period ended June 30, AAX’s net loss widened significantly to RM 854.9 million as its revenue halved to RM 1 billion.
The Board of Directors has appointed Mercury Securities Sdn Bhd as senior advisor for the proposed corporate restructuring.
The AAX share price closed at five sen today, giving it a market cap of RM207 million.