B3.1bn injection keys Thai AirAsia rejig
Asia Aviation (AAV), the largest shareholder of Thai AirAsia (TAA), is preparing to restructure its business after securing 3.15 billion baht from a new investor as it was unable to obtain a soft loan from the government.
Tassapon Bijleveld, executive chairman of AAV, said it is also planning to launch an initial public offering (IPO) for TAA as part of a corporate restructuring to stem the impact from the pandemic.
"We cannot wait for the government to allocate soft loans airlines requested a year ago. We hope the agreement with a new investor will help the airline preserve liquidity and maintain flight operations as usual when the aviation industry bounces back early next year," said Mr Tassapon.
He said TAA is qualified to be listed on the Stock Exchange of Thailand (SET), replacing AAV, which is its holding company.
Listing TAA creates more opportunities to raise funds, while investors receive dividends directly from the airline and not through the holding company, said Mr Tassapon.
The loan of no greater than 3.15 billion baht from the new investor carries no interest charge, he said.
The provision of the loan is in the form of a convertible loan agreement or convertible bonds.
"Our new local investor has never been involved in the aviation industry," said Mr Tassapon.
"After restructuring, we'll have a new representative on the company's board, but I assure you it won't impact the operations of TAA."
To list TAA on the SET, the company must receive approval from shareholders, with a meeting scheduled on June 4, as well as the Securities and Exchange Commission (SEC).
Then IPO procedures can begin, which can take six months.
He said the third outbreak has led to 60-70% of domestic flights being cancelled as lockdowns have been imposed in many areas.
The scale of the impact is critical after the second wave in Samut Sakhon late last year hurt the industry, said Mr Tassapon. The airline had to downsize its workforce by 75% to save on operational costs, but the new wave this month caused even more economic pain.
To proceed with the restructuring plan, AAV has to be liquidated and dissolved in order to allocate 55% of TAA shares to shareholders of the newly listed company.
However, the dissolution and liquidation can only happen when the IPO of TAA is approved by the SEC.