Capital A to dispose of 100% stake in AirAsia Aviation Group, AirAsia for RM6.8bil

KUALA LUMPUR: Capital A Bhd has entered into a conditional share sale and purchase agreement with AirAsia Group Sdn Bhd (AAG) to dispose of its 100 per cent equity interest in AirAsia Aviation Group Ltd (AAAGL) and AirAsia Bhd (AAB) for RM6.8 billion.

The group entered into conditional share sale and purchase agreement with AAG to dispose of AAAGL for RM3 billion and AAB disposal for RM3.8 billion.

AAAGL and AAB are wholly-owned subsidiaries of Capital A.

Pursuant to AirAsia X Bhd’s (AAX) proposed internal reorganisation, AAG will assume the listing status of AAX prior to the completion of the proposed disposals.

Capital A has also announced a proposed distribution of new ordinary shares in AAG to be received as consideration shares for the proposed AAAGL disposal of about RM2.20 billion to the entitled shareholders of the group.

“The AAAGL disposal consideration of RM3 billion will be satisfied entirely via the issuance of 2.30 billion new AAG shares at an issue price of RM1.30 for each consideration share,” the group said in a 68-page document filed with Bursa Malaysia today.

The AAB disposal consideration will be satisfied by way of AAG’s assumption of the company’s debt due to AAB of RM3.8 billion on the AAB completion date pursuant to the terms of the disposal.

It also said that based on Capital A’s audited consolidated financial statements for the financial year ended Dec 31, 2022 (FY2022), the proposed AAAGL disposal is expected to result in a pro forma gain arising from the remeasurement of the remaining interest in AAAGL upon completion of the disposal of about RM4.69 billion.

As for AAB, it said the proposed AAB disposal is expected to result in a pro forma gain on disposal of AAB upon completion of the disposal of some RM6.07 billion based on the group’s audited consolidated financial statements for FY2022.

“The proposed disposals are intended to be undertaken by Capital A to streamline the group’s core business activities to focus on aviation services and digital businesses which are essential and complementary to the passenger airlines business,” it said.

Upon completion of the exercise, the aviation services and digital businesses mainly encompass a wholly-owned subsidiary, Asia Digital Engineering; super app segment carried out by SuperApp, a 96.19 per cent subsidiary of Capital A; logistics segment carried out by Teleport, a 77.56 per cent subsidiary; and digital payments segment carried out by BigPay, a 99.56 per cent subsidiary of the group.

“Additionally, after the proposed distribution, the entitled shareholders will be able to continue participating in the business of the new aviation group via AAG shares held, which will be listed on the Main Market of Bursa Securities after AAX’s proposed internal reorganisation.

It also noted that Capital A is expected to record a gain on remeasurement of interest in AAAGL and gain on disposal of AAB and thereby is expected to improve the shareholders’ equity of the group in its effort to regularise its financial conditions.

“The proposed disposals allow all the airline entities operating under the ‘AirAsia’ brand to be housed under a new investment holding company, namely AAG, forming an enlarged aviation group comprising AAG, AAX and its group of companies (AAG Group), AAAGL group, and AAB group, collectively referred to as the new aviation group,” it explained.

“This allows the AAX group to be part of an enlarged aviation group with award-winning airlines with over 22 years of established history and track record.

“The new aviation group will operate and provide a full spectrum of short, medium and long-haul low-cost air transportation services, with domestic flights and international flights from Malaysia, Thailand, the Philippines, Indonesia, and Cambodia to numerous destination countries,” it said.

On Jan 8, Capital A has entered into a non-binding letter of offer with AAX for the proposed disposal of its aviation business, namely AirAsia Bhd (AirAsia Malaysia) and AAAGL, with a move to streamline the company and its group of companies’ core business activities to focus on aviation services and digital businesses.

AAAGL operates passenger airline services through subsidiaries in Thailand, Indonesia, the Philippines and Cambodia.

On completion of the exercise, the aviation services and digital businesses will mainly encompass Asia Digital Engineering Sdn Bhd, AirAsia SuperApp Sdn Bhd, Teleport Everywhere Pte Ltd and BigPay Pte Ltd. – BK