Capital A Berhad says the proposed strategic divestment and AirAsia Group’s strategic acquisition of its aviation businesses approved by the boards is expected to catalyse AirAsia to its next growth phase to become the world’s first low-cost network carrier and redefine the aviation industry landscape.
Under the terms of the agreement and subject to requisite approvals, the Transaction includes two parts:
The divestment of AirAsia Aviation Group Limited, consisting of AirAsia subsidiaries in Thailand, Indonesia, the Philippines and Cambodia, which will be fulfilled through the issuance of new AirAsia Group shares to Capital A worth RM3 billion. Following this divestment, Capital A will immediately distribute-in-specie RM2.2 billion worth of the newly issued AirAsia Group shares to Capital A shareholders. Upon the completion of the proposed divestment and AirAsia X proposal, Capital A is expected to retain 18.39% of the enlarged issued shares of AirAsia Group.
The divestment of AirAsia Berhad, otherwise known as AirAsia Malaysia, for RM3.8 billion, to be satisfied by AirAsia Group’s assumption of RM3.8 billion of debt owed by Capital A to AirAsia Berhad.
The group said shareholders from both sides stand to gain as the value of the aviation assets is realised. Prior to the Transaction, AirAsia X’s shares and listing status will be transferred to AirAsia Group, effectively materialising the corporate structure of an enlarged aviation group, with AirAsia X’s shareholders then holding shares in AirAsia Group.
The issuance of free warrants acts as a token of appreciation for shareholders’ continued support, while also providing them with the option to enhance their equity participation and contribute to the future growth trajectory of the enlarged aviation business. In recognition of the Transaction’s magnitude, a private placement is also proposed to fortify AirAsia Group’s financial standing, increase its shareholder base and improve the trading liquidity of its shares. ]
Capital A said from the perspective of AirAsia X shareholders, the allure lies in gaining access to an unlocked value of RM6.8 billion through a RM3 billion new shares issuance. This investment grants them ownership in a mature and ongoing airline business operation, comprising four established airlines.
Capital A shareholders on the other hand stand to benefit significantly as the proposed divestment is expected to unlock RM6.8 billion in value of Capital A’s aviation business, more than double the current market capitalisation of the group. Following the divestment and the distribution-in-specie of RM2.2 billion worth of new AirAsia Group shares, Capital A shareholders will maintain direct ownership in the combined aviation businesses, ensuring access to future growth opportunities. Moreover, post-divestment, Capital A will retain four high-growth, aviation-focused core businesses, including Capital A Aviation Services, Teleport, MOVE Digital, and Capital A International, all poised for continued growth and diversification.
CEO of Capital A and Advisor to the newly formed AirAsia Aviation Group, Tony Fernandes added, “The divestment facilitates clear distinction between Capital A’s main portfolios of businesses – the aviation group, digital businesses, and logistics plus aviation services to optimise synergies across entities and unlock greater value for all stakeholders.”
He added, “When AirAsia was founded in 2001, our vision was clear: to establish a low-cost airline model focused on simplicity and cost-efficiency, primarily operating single-type narrowbody aircraft optimised for short-haul flights. To capture the medium-haul market, AAX was created in 2007 adhering to the same principles of low-cost, and efficient operations. The emergence of Airbus’ A321LR and A321XLR, is an unprecedented, game-changing opportunity.
