AirAsia Group—controlled by Tony Fernandes—said late Monday it will raise up to 1 billion ringgit ($238.6 million) through a convertible debt issue to existing shareholders as the budget carrier prepares to resume flights by the end of the year and builds its digital platform.
Under the proposed fundraising exercise, the company said existing shareholders can subscribe to 7-year redeemable convertible unsecured Islamic debt securities (RCUIDS) with a nominal value of 0.75 ringgit each on the basis of two RCUIDS for every six AirAsia shares held. The debt instruments come with free detachable warrants.
“Fundraising is a critical component of our recovery strategy,” Fernandes, 57, AirAsia’s group CEO, said in a statement.
The fresh funds from shareholders will provide the airline ample liquidity to weather the lingering impact of the Covid-19 pandemic, which has kept countries including Malaysia and Australia in lockdown as governments strive to curb the spread of the virus. AirAsia has been in the red for seven consecutive quarters, posting a net loss of 767.4 million ringgit in the first quarter.
Notwithstanding the deepening losses, Fernandes is optimistic that global air travel will resume gradually from this quarter through the first quarter of 2022.
“There is light at the end of this long tunnel,” Fernandes said, noting that vaccines are being rolled out aggressively across key markets.
AirAsia said in May it plans to raise as much as 2.5 billion ringgit through a combination of debt and share sales. It generated 336 million ringgit from the share placements earlier this year.
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Funds from the rights issue of RCUIDs, which is expected to be completed by the fourth quarter, will be used to settle fuel hedges, aircraft leases as well as bankroll the group’s digital initiatives, the company said.
“While the airline will continue to underpin all operations, over the past 18 months, our digital transformation strategy has been gaining strong momentum with significant improvements across all key metrics for our Airasia super app, logistics and e-commerce venture Teleport and our for BigPay fintech business,” Fernandes said.
BigPay—which aims to expand services beyond international remittance and digital payments—is seeking one of five digital banking licenses Malaysia is making available.
Last week, the airline agreed to take over Gojek’s operations in Thailand in a stock swap that will give the Indonesian ride-hailing giant a 4.76% stake in AirAsia Digital.
Fernandes said then that the deal, which values AirAsia Digital at $1 billion, will “turbo charge” the airline’s ambition to become one of Southeast Asia’s leading super apps.