Australia’s Rex confirms A$150mn investment from PAG

Rex – Regional Express (ZL, Wagga Wagga) has signed a final agreement with Asia-Pacific investment firm PAG regarding AUD150 million Australian dollars (USD109 million) in funding for the upcoming launch of domestic jet operations. The total amount will be injected by PAG’s subsidiary PAG Regulus Holdings Pte Ltd. in the form of senior convertible notes. An initial funding tranche of AUD50 million (USD36.3 million) will be drawn down towards early January 2021 with the balance to be available for drawdown over the following three years in tranches of at least AUD5 million (USD3.6 million). In return, PAG will be entitled to nominate two directors to the Rex board. “PAG is a well-respected and highly successful investment group which manages more than USD40 billion on behalf of major global institutional investors. I look forward to tapping into the experience and expertise of PAG’s nominated directors whose professionalism I have grown to respect over the last few months of extensive discussions,” Rex’s Executive Chairman Lim Kim Hai said in a statement. If converted into shares, the initial tranche of AUD50 million would give PAG a 23.2% stake in Rex. The conversion of the remaining AUD100 million would increase that to a maximum level of 47.6%. The transaction remains subject to the approval of Rex’s existing shareholders and the Foreign Investment Review Board. Rex plans to use the funds primarily to finance the launch of its B737-800 domestic operations. The carrier, which has thus far focused exclusively on regional routes operated with a fleet of Saab turboprops, is planning to commence flights between Sydney Kingsford Smith and Melbourne Tullamarine on March 1, 2021, using three Boeing narrowbodies. It has so far taken delivery of a single B737-800 proving flights for which have scheduled with the Australian Civil Aviation Safety Authority (CASA) for December 2, 2020.