AirAsia plans share buy-back

Price recovery: A file picture shows AirAsia aircraft parking on the tarmac at KLIA2. The airline’s share lost more than half its market value year-to-date to 78 sen on Aug 26. It remained under RM1 for almost two weeks before closing at RM1.31 yesterday. – AFP

PETALING JAYA: AirAsia Bhd is proposing a share buy-back of up to 10% of its issued and paid-up share capital at an upcoming EGM to stabilise its share price which is recovering from a sell-down.

“The proposed share buy-back is to stabilise the market price, stop speculation of the shares and enhance investor confidence.

“It will enable AirAsia and its subsidiaries to utilise any of their surplus financial resources, which is not immediately required for other uses, to purchase its own shares from the market,” it said in a filing with Bursa Malaysia yesterday.

The budget airline’s share has lost more than half its market value year-to-date.

The share price had dropped to 78 sen on Aug 26.

It remained under one ringgit for almost two weeks before gaining some ground to end the week’s trading at RM1.31, up 6.5% yesterday.

The funding of the proposed share buy-back will be from internally-generated funds, external bank borrowings or a combination of both.

“All purchased shares may be cancelled or retained as treasury shares or a combination of both. Treasury shares may be distributed as share dividends, resold on Bursa Malaysia Securities and/or subsequently cancelled,” it said in the filing with the stock exchange.

The proposed share buy-back will reduce the working capital of the company, the quantum depends on the number and the purchase price or prices.

The effect on the group’s net asset will depend on the actual number of and price paid for the purchased shares, the funding cost, or any loss in interest income to the group, and whether the purchased shares are cancelled, retained as treasury shares, resold on Bursa Securities or distributed as share dividends to shareholders of the company.