AirAsia X undertakes group wide-debt, corporate restructuring to survive

KUALA LUMPUR: AirAsia X Bhd has proposed to undertake a group-wide debt and corporate restructuring with a revised business model to survive and thrive in the long-term.

In an exchange filing today, the low-cost carrier said the exercise would be taken to avoid liquidation and allow the airline continue to operate.

“The right-sizing of the group’s level of operations and its financial obligations are pre-requisites for the raising of any fresh capital, comprising both equity and debt, that will be used to support the implementation of the group’s revised business plan,” it said.

AirAsia X said the proposals included a debt restructuring scheme with its unsecured creditors involving RM63.50 billion debts to be reconstituted into an acknowledgement of indebtedness by the company for a principal amount of up to RM200 million.

“Any balance in excess of the reconstituted amount and all other sums after the cut-off date as at June 30, 2020 arising from these debts (including interest, penalty interest) shall be waived.”

The airline said the corporate restructuring would involve a proposed reduction of 90 per cent of the issued share capital of AirAsia X.

It had also proposed consolidation of every 10 existing ordinary shares into one share.

AIrAsia X said the airline was facing severe liquidity constraints in meeting its debt and other financial commitments.

Previously, the group had embarked on a cost containment exercise included grounding all scheduled flights, salary cuts and retrenchment across the group.

As at June 30 this year, the company had an unaudited deficit in shareholders’ equity of RM960 million and its unaudited current liabilities of RM3.38 billion exceeded unaudited current assets of RM1.39 billion by RM1.99 billion.

“Based on the current financial position and the industry outlook, the group will not be able to meet our immediate debt and other financial commitments.

“An imminent default of such commitments will result in early termination of arrangements with suppliers, creditors and financiers that will precipitate a potential liquidation of the airline,” AAX added.

In a separate statement, AIrAsia X said it had appointed Datuk Lim Kian Onn as deputy chairman to lead the airline restructuring.

Lim is a chartered accountant and was an investment banker.

He has been a board member of AirAsia X since 2012.

“A major debt restructuring and a renegotiation of its financial obligations are pre-requisites for any raising of fresh equity which will be required to restart the airline.”

AirAsia X chief executive officer Benyamin Ismail said it had been extremely difficult for the airline during this period as it had to ground all scheduled flights, implement salary cuts and retrenchment for the first time in its history as a consequence of the pandemic.

“Similar exercises are likely to continue during the restructuring process, but our focus is to ensure a successful restructuring to keep as many jobs as possible.

“We have a low cost base, we are in the right part of the market and many of our key markets are in green zones which are likely to reopen first.

“We have a robust recovery strategy in place, and with the continued support from our stakeholders, we will overcome all challenges and come out stronger,” he said.

Source: NST