AirAsia X proposes $123mn rights issue, lessor opposes

AirAsia X (D7, Kuala Lumpur Int’l) has proposed raising MYR500 million ringgit (USD123 million), with a rights issue for existing shareholders of up to MYR300 million (USD74 million) and a share subscription for new investors of up to MYR200 million (USD49 million). The latter share issuance would be done via subscription by a special purpose vehicle, with an option for the vehicle to subscribe for an additional 15% of the enlarged total number of AirAsia X shares, the airline explained in a stock exchange filing on December 14. The overall equity fundraising exercise is “a critical component of the comprehensive restructuring and recapitalisation plan announced [in October] and will support the implementation of the group’s revised business plan,” it elaborated in a separate statement. Given the current “dynamic” operating environment, it said it had envisaged several scenarios in its business plan but that the funds to be raised are adequate for each of these scenarios. However, before the fundraising can be undertaken, the AirAsia Group carrier must first secure its creditors’ approval for its debt restructuring scheme. Several lessors have intervened in the restructuring proceedings to register their objections. The debt restructuring is a prerequisite for the recapitalisation of the company, AirAsia X stressed, and in the next few weeks it will “continue to engage with creditors and hopes to further allay their concerns.” “The alternative to the scheme is a liquidation of the airline without any returns to creditors. Post-Covid-19, a reset with fresh equity and a repositioning of the airline as a regional medium-haul low-cost carrier will provide the best economic returns to creditors in a continued business relationship,” it said. Under the debt restructuring plan, AirAsia X has proposed reconstituting USD15.3 billion of debt into a principal amount of MYR200 million (USD49 million) and waiving the rest. Reuters reported on December 15 that it had seen documents filed at Malaysia’s High Court in Kuala Lumpur in which BOC Aviation had asked the court to dismiss the scheme because it rules out a debt-to-equity swap and gives too much power to Airbus as a creditor.