Malaysian tycoon Tony Fernandes’ AirAsia to raise up to $ 238 million to fund takeover, Digital Pivot

The AirAsia group, controlled by Tony Fernandes, announced Monday night that it would raise up to 1 billion ringgits ($ 238.6 million) through a convertible debt issue to existing shareholders as the low-cost carrier closes preparing to resume flights by the end of the year and building its digital platform.

As part of the proposed fundraising exercise, the company said that existing shareholders can subscribe to 7-year redeemable unsecured convertible Islamic debt securities (RCUIDS) with a face value of 0.75 ringgit each. on the basis of two RCUIDS for six AirAsia shares held. Debt securities are accompanied by free detachable warrants.

“Fundraising is a critical part of our recovery strategy,” Fernandes, 57, CEO of AirAsia Group, said in a statement.

New shareholder funds will provide the airline with plenty of liquidity to deal with the lingering impact of the Covid-19 pandemic, which has kept countries like 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 RM 767.4 million in the first quarter.

Despite the worsening losses, Fernandes is optimistic that global air travel will pick up gradually from this quarter into 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 in key markets.

AirAsia said in May that it plans to raise up to Ringgit 2.5 billion through a combination of debt and share sales. It generated 336 million ringgit from equity placements earlier this year.

Funds from RCUID’s rights issue, which is expected to be completed by the fourth quarter, will be used to settle fuel hedges, aircraft leases as well as to fund the group’s digital initiatives, a indicated the company.

“As the airline will continue to support all operations, over the past 18 months our digital transformation strategy has gained momentum with significant improvements in all key metrics for our Airasia super app, our logistics business. and Teleport e-commerce and our for BigPay fintech, ”Fernandes said.

BigPay, which aims to expand services beyond international remittances and digital payments, is looking for 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 share swap that will give the Indonesian rideshare giant a 4.76% stake in AirAsia Digital.

Fernandes then said the deal, which values ​​AirAsia Digital at $ 1 billion, “will boost the turbo rate” of the airline’s ambition to become one of Southeast Asia’s top super apps. .