Capital A to divest aviation businesses to AirAsia X

Tan Sri Tony Fernandes

KUALA LUMPUR: Capital A Bhd is finalising its regularisation plan that could see the group divesting its aviation businesses, namely AirAsia Bhd and AirAsia Aviation Group Limited, to AirAsia X Bhd (AAX).

“Together with our partners, financial and legal advisors, we are finalising a scheme, subject to regulatory and other necessary approvals, that we anticipate will not only uplift us from the Practice Note 17 (PN17) status, but also unlock enormous value for the shareholders of Capital A, and ultimately, lead us to a healthier financial standing and profitability,” chief executive officer Tan Sri Tony Fernandes said in a statement.

He said the scheme will not involve shareholders’ value dilution.

“In essence, the scheme will result in a clear separation between Capital A’s three main portfolios of businesses, namely the aviation group, the digital businesses and the logistics plus aviation services,” he added.

The plan envisaged will entail the disposal of Capital A’s aviation businesses, namely AirAsia and AirAsia Aviation Group Limited, to AAX.

“The shares consideration, received in exchange for the disposal, will then be distributed to Capital A shareholders, so that they will retain a direct interest in the aviation businesses via AAX, following the restructuring.

“In essence, via this scheme, Capital A’s shareholders’ value will be preserved. Capital A will be rebranded as an aviation services and digital group, post the disposal and distribution exercises.

“We envision a separate spin-off listing in the future for the aviation services businesses of Capital A once the PN17 status is resolved.”

The group is seeking an extension of time from Bursa Malaysia Securities Bhd to submit a holistic regularisation plan to remedy its PN17 status.

“The board of directors of the company wishes to announce that the company had on Nov 29 submitted an application to Bursa Securities for an extension of time of six months until July 7, 2023, for Capital A to submit its regularisation plan to Bursa Securities,” Capital A said in a filing with Bursa Malaysia.

“While our PN17 status remains an accounting issue and does not accurately reflect the business viability and prospects of Capital A, we have nevertheless worked very hard to develop a plan to address the PN17 status as a key part of our post-pandemic recovery journey,” Fernandes said.