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AirAsia Bhd announced on Wednesday a corporate exercise which includes potential new equity for Indonesia AirAsia (IAA) and Philippines AirAsia (PAA) via a convertible bond issuance.
AirAsia pointed out the company has a solid footing, strong balance sheet, rich in assets and good business outlook, as it unveiled new equity plans for IAA and PAA as it sought to reduce AirAsia’s inter-company loans.
The first step was to raising share capital to about US$100mil each for IAA and PAA from the present level of US$13.81mil and US$13.28mil respectively.
“The management is now in the final stages of discussions with the local partners to raise share capital to around US$100mil for IAA and PAA from the present level of US$13.81mil and US$13.28mil respectively.
“Part of the cash raised will be used to pay down AirAsia Bhd’s interco,” it said.
Under the second step under the pre-IPO, it said plans were to raise a minimum of US$100mil from new investor(s).
AirAsia said it is finalising the structure of the Pre-IPO exercise which is targeted to take place in the near term.
“Through this exercise, there will be new investor(s) that will come in for both IAA and PAA. The new investor(s) will inject at least US$100mil for each associate by subscribing to convertible bonds (CB) issued by IAA and PAA respectively.
“The CB will have a low coupon with a two-year maturity period. The CB can be converted at a rate to be determined, tentatively discounted from the valuation of the companies in 2017. As investor(s) exercise the CB in 2017, AAB will match by capitalising our debt to ensure our shareholding remains at 49% in IAA and 40% in PAA.
“Part of the cash raised in the CB subscription will be used to pay down AAB’s interco, while the remainder will be kept in the business for working capital.
Under the third step, the IPO will have a valuation of about US$700mil for IAA and US$600mil for PAA
The target to IPO both associates will be in 2017, with valuation of approximately US$700mil for IAA and US$600mil for PAA.
“The company targets to float 20% of the shares raising minimum of US$150mil. At IPO all shareholders will be diluted proportionately. Part of the IPO proceeds will be used to pay down AAB’s interco,” it said.
