AirAsia in $246mn fundraise, creditors back AAX restructure

AirAsia Group shareholders voted on November 11 in favour of a cash call to raise up to MYR1,024,058,370 ringgit (USD245.9 million) to recapitalise the group. Separately, on November 12, reports emerged that all three groups of creditors of AirAsia X (D7, Kuala Lumpur Int’l) had agreed to the airline’s radical restructuring scheme.

The cash call, which will take the form of a renounceable rights issue of seven-year Redeemable Convertible Unsecured Islamic Debt Securities (RCUIDS) with a nominal value of MYR0.75 (USD0.18) each, was approved by 461 shareholders to 69 against at the company’s extraordinary general meeting, AirAsia Group said in a Bursa Malaysia stock exchange filing.

The 461 shareholders hold a total of 2.23 billion shares, which indicates 99.95% support for the measure, the disclosure added.

The issue gives shareholders the right to buy two of the debt securities, together with one detachable warrant, for every six AirAsia Group shares held. The RCUIDS have a profit rate of 8% per year and are convertible to new shares on a one-to-one basis.

Half of the proceeds will be channelled towards working capital; up to 12% to funding its digital business and for marketing; and the rest for lease, maintenance, and fuel hedging payments. Tony Fernandes and Kamarudin Meranun, AirAsia’s largest shareholders with a 26.4% stake, have said they will put MYR257.27 million (USD61.8 million) towards the cash call via a special purpose vehicle called Sky Accord.

Meanwhile, in consecutive meetings that had been scheduled for November 12, the first and second of three groups backed AirAsia X’s proposal to pay only 0.5% of its MYR33.65 billion (USD8.1 billion) of liabilities owed, with 100% and 97.6% voting in favour, respectively. The plan also terminates all existing contracts.

The first group includes airports, financial institutions, and maintenance providers, the second one lessors, engine suppliers, travel agents, and passengers. Airbus (AIB, Toulouse Blagnac), the low-cost long-haul carrier’s biggest creditor, is the sole entity in the third “group”, and AirAsia confirmed earlier media reports that it too approved the deal.

AirAsia said in a statement that across all three classes, 99.0% of all creditors had voted in favour of the scheme.

“When the scheme was initially announced in October 2021, it was comprehensively rejected and widely derided as being wholly inadequate and unreasonable. However, through a process of many transparent discussions on our business plan and alignment of common business interests, all major creditors have agreed that the combined interests of the various groups of stakeholders are best served by allowing the airline to proceed with the scheme intact and without substantial changes to what was initially presented,” it said.

The approvals will now be presented for court sanction in the coming weeks and, once approved, AirAsia X will embark on its recapitalisation which shareholders approved in June. Completion is expected in the first quarter of 2022, after which the airline “will be well poised to compete very effectively in the markets where it will operate,” it added.

The airline also reached a deal with Airbus to cut its outstanding order book for seventy-eight A330-900s and thirty A321-200NX(XLR)s to just fifteen A330neo and twenty A321neo(XLR)s.