Tony Fernandes unveils plan to shed Capital A’s unwanted PN17 tag
Published on: Thursday, December 01, 2022
By: FMT
Fernandes says the PN17 status is just “an accounting issue” and does not reflect Capital A’s business viability and prospects. (Reuters pic)
PETALING JAYA: In its bid to shed the Practice Note 17 (PN17) status, Capital A Bhd (formerly known as AirAsia Group Bhd) plans to divest its aviation businesses to affiliated company AirAsia X Bhd (AAX).
It is also seeking an extension of time from Bursa Malaysia Securities Bhd to submit a holistic regularisation plan to remedy its PN 17 status.
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Capital A CEO Tony Fernandes confirmed the plan envisaged will entail the disposal of the group’s aviation businesses, namely AirAsia Bhd and AirAsia Aviation Group Ltd, to AAX.
He assured the scheme will not involve shareholders’ value dilution and will result in a clear separation between Capital A’s three main portfolios of businesses – the aviation group, digital businesses and logistics plus aviation services.
The shares consideration, received in exchange for the disposal, will be distributed to Capital A shareholders, so that they will retain direct interest in the aviation businesses via AAX, following the restructuring, he said in a statement.
“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,” Fernandes said.
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The group envisions a separate spin-off listing in the future for the aviation services businesses of Capital A once the PN17 status is resolved, he added.
The group expects to announce the finalised regularisation plan to Bursa Malaysia Securities in January 2023 and followed by submission for approval by next February.
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Capital A expects to complete the implementation of the regularisation plan by July 2023, subject to necessary approvals including from its board, shareholders, and redeemable convertible unsecured Islamic debt securities (RCUIDS) holders, Bursa Malaysia Securities and other relevant authorities.
He anticipates the plan “will not only uplift us from the PN17 status, but also unlock enormous value for the shareholders of Capital A”.
PN17 relates to companies that are in financial distress. Such entities need to submit their proposal to restructure and revive the company to maintain their listing status.
This follows Capital A’s recent announcement it is engaging RHB Investment Bank Bhd, BDO Consulting Sdn Bhd, Deloitte Corporate Advisory Services Sdn Bhd, Ernst & Young PLT, Adnan Sundra & Low, and Providence Strategic Partners to advise on its regularisation plan.
Fernandes argued that the group’s 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.
“We were at the sharp end of Covid, as were many airlines around the world, but we are coming out of it stronger than before. Our airlines and network are fast returning to pre-pandemic levels, and our digital businesses are performing better than many had expected,” he added.
He was grateful for the tremendous support and understanding so far from its lessors, partners, customers, staff and other stakeholders, who “enabled us to survive this far and turn this crisis into an opportunity”.
Fernandes was previously quoted as saying Capital A is aiming for a dual July 2023 listing of its aviation services group, with the New York Stock Exchange and Nasdaq among a number of stock exchanges that have made the group listing offers.
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