Capital A Proposes Capital Reduction of up to RM6bil
Plan to Exit PN17 Status and Enhance Credibility
PETALING JAYA: Capital A Bhd has proposed to reduce its issued share capital by up to RM6 billion as part of a regularisation plan to exit its Practice Note 17 (PN17) status.
The proposed capital reduction aims to rationalise the balance sheet of the company and reflect more accurately the value of its underlying assets and financial position. This would also facilitate the enhancement of the credibility of the group with its bankers, customers, suppliers, investors, and other stakeholders, as well as provide a stronger platform for future growth.
Benefits of the Proposed Capital Reduction
The reduced accumulated losses would enable Capital A to focus on its core businesses, which are identified as viable, profitable, and having growth potential. The group would also be able to strategically diversify from being one of the major low-cost carriers in Southeast Asia to a diversified ecosystem of aviation and digital services.
The shift is designed to capture opportunities beyond traditional airline operations, directly responding to evolving consumer demands and technological advancements. By doing so, Capital A could capitalise on existing strengths while exploring new revenue streams.
Corporate Exercise to be Undertaken
Capital A said it will dispose of the entire equity of AirAsia Aviation Group Ltd (AAAGL) and AirAsia Bhd (AAB) as part of the corporate exercises. This would allow the company to no longer consolidate the consolidated net liabilities of AAAGL and AAB, putting Capital A on better financial footing.
The group has appointed RHB Investment Bank as the principal adviser to the company for the proposed regularisation plan.
Timeline and Next Steps
The proposed regularisation plan is expected to be submitted by November 31, 2024.
As of 5 pm, Capital A’s share price was up by 1.5 sen or 1.54% at 99 sen, giving the group a market capitalisation of RM4.27 billion.
Conclusion
The proposed capital reduction and corporate exercises aim to strengthen Capital A’s financial position, enhance its credibility, and position the group for future growth. The shift towards a diversified ecosystem of aviation and digital services promises a more sustainable and profitable future for the company.
Frequently Asked Questions
* What is the purpose of the proposed capital reduction?
The proposed capital reduction aims to rationalise the balance sheet of Capital A, reflect more accurately the value of its underlying assets, and facilitate the enhancement of the group’s credibility.
* What are the potential benefits of the proposed capital reduction?
The reduced accumulated losses would enable Capital A to focus on its core businesses, improve its financial position, and enhance its credibility with stakeholders.
* What is the timeframe for the proposed regularisation plan?
The proposed regularisation plan is expected to be submitted by November 31, 2024.