AirAsia To Raise RM1 Billion Through Rights Issue

As vaccination ramps and borders expected to open, AirAsia is prepping for recovery and looking to raise funds via rights issue. The group has just made that announcement and proposed a renounceable rights issue to its existing shareholders, to raise up to RM1 billion as part of the overall fundraising strategy. 

The Proposed Rights Issue entails the issuance of 7-year Redeemable Convertible Unsecured Islamic Debt Securities (“RCUIDS”) with a nominal value of RM0.75 each, plus free detachable warrants on the basis of 2 RCUIDS with 1 warrant for every 6 AAGB shares held. As a key component of AAGB’s fund-raising initiatives, the Proposed Rights Issue will enable AAGB to raise funds supporting various segments of the Group, including but not limited to, working capital and other operational costs due to the outbreak of the global Covid-19 pandemic, balanced with funding growth of the various airasia digital business units. 

In a statement, CEO of airasia Group Tan Sri Tony Fernandes cited that the fundraising process is a critical component of its recovery strategy and finds the timing to be right, as vaccines are being rolled out aggressively in all of its key markets, alongside with better education and testing. 

“There is light at the end of this long tunnel. The exercise will provide a platform to seek a fresh funding injection from shareholders to maintain liquidity during the downtime in flying and fuel growth of the key non airline digital businesses, ahead of the expected resumption of global air travel, in quarter 3 and early next year”

While the airline will continue to underpin all operations, over the past 18 months, its digital transformation strategy has been gaining strong momentum with significant improvements across all key metrics for its airasia Super App, logistics and e-commerce venture Teleport and the BigPay fintech business which has also applied for the digital banking license. According to Tony, the Super App was estimated to be valued at over USD 1 billion.

The Company confirms it is also well progressed in discussions to secure a number of other fundraising initiatives for a sustainable and viable business for the short haul, but a stronger and more resilient operation for the future. The Proposed Rights Issue is expected to be completed in the 4th quarter of 2021.

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