Thai AirAsia plans IPO for capital injection by new investor

Thai AirAsia’s parent company has disclosed a corporate and capital restructuring plan for the airline, which involves listing it on the Stock Exchange of Thailand (SET) to accept a Bt3.15 billion ($100 million) loan from a new investor.

Asia Aviation’s board approved the plan on 26 April, it says in a 27 April SET filing.

The new investor is not connected to Asia Aviation or Thai AirAsia and will provide the funds in the form of a convertible loan agreement or convertible bonds with zero-coupon issued at par, with an approximately three-year term.

This will be convertible to ordinary shares in Thai AirAsia at an agreed conversion price of about Bt20.4 per share. The conversion period is expected to be after Thai AirAsia receives approval for an initial public offering.

Should the investor opt not to convert the loan or bonds into shares, it will hold the investment, which bears 3% interest, until maturity as a creditor.

Asia Aviation says the investor is currently conducting due diligence and expects to complete the process in mid-May.

It states that the investor wishes to invest directly in Thai AirAsia rather than through holding shares in Asia Aviation. Taking the airline public would also “increase the opportunities for Thai AirAsia to raise funds by itself rather than being dependent on [Asia Aviation] for fundraising”.

Concurrently, Asia Aviation plans to convert its shareholders into direct shareholders of Thai AirAsia. This entails dissolving and liquidating Asia Aviation and the company says its board has yet to approve this.

Asia Aviation holds shares equivalent to 55% of Thai AirAsia’s paid-up capital while AirAsia Investment, which is also the airline’s major creditor, holds shares representing 45%.

Asia Aviation expects the new investor to hold 11.4% of Thai AirAsia X’s expanded shares issued after it goes public.