Thai AirAsia, a subsidiary of Asia Aviation Public Company Ltd (AAV) under the low-cost airline AirAsia Group Bhd has approved its capital restructuring plan. The Thai unit of AirAsia will be seeing a $100.41 million (3.15billion baht) capital injection by an anonymous investor.
The Covid-19 pandemic has clearly incurred a great blow to the aviation industry since early 2020 last year. To sustain operations, AAV has mitigated the loss by allocating loans from new investors and offering initial public offering (IPO) to maximized the company’s liquidity.
As the main operating unit of Asia Aviation (AAV), Thai AirAsia has a 45% ownership control by AirAsia Group Bhd.
The investment will be provided in the form of a convertible loan agreement or an interest-free, convertible bond (zero-coupon bond). Investors can expect to gain stakes in Thai AirAsia by converting their loans or bonds to regular shares of $0.65 (20.3925 baht) per share once it has been offered in the IPO.
As AirAsia mentioned, “Once the conversion conditions occur, the status of the new investor will change from a creditor into a shareholder of Thai AirAsia.” They furthered that the anticipated date of completion for the whole process would be around mid-May of 2021 with the transaction completed in June.
As for the IPO, AirAsia said that the preparation should be taking more than seven months before it is up for offer.
AirAsia emphasized that various measures have been implemented to alleviate the effects of Covid-19 such as reduction of employee working hours. Yet, all efforts were unable to improve the group’s financial circumstances.
Although there have been several claims such as that by MIDF Amanah Investment Bank Bhd on the recovery of the aviation and air travel industry presuming to improve in 2021, it maintains a struggle as that travel restriction has not been fully lifted yet.
Other than the currently announced capital restructuring, AirAsia has yet to receive any monetary support from any financial institution or soft loans from the government.