Malaysia's Capital A to cut share capital by $1.4bn

Capital A wants to reduce its share capital by MYR6 billion ringgits (USD1.38 billion), an October 23, 2024, Bursa Malaysia filing said, in an effort to offset its accumulated losses.

The company said the exact quantum of share capital to be reduced is dependent on the accumulated losses and resulting issued share capital. It is part of a plan to lift the bourse's PN17 status for companies it sees as financially distressed.

"The proposed regularisation plan serves to regularise the financial condition of the group in order to address and uplift the PN17 status of the company," the filing reads. "The purpose of the proposed capital reduction is to reduce the accumulated losses of the company to the extent possible with a view to rationalise the balance sheet of the company to reflect more accurately the value of its underlying assets and thus the financial position of the company."

CEO Tony Fernandes added: "This is our final hurdle to release the group from the financially distressed status that has been hindering our ability to raise capital and grow."

Capital A is the owner of AirAsia Aviation Group (AAAGL) and AirAsia Bhd (AAB). AAAGL operates the AirAsia brands based outside Malaysia, including AirAsia Cambodia, Indonesia AirAsia, Philippines AirAsia, and Thai AirAsia, while AAB operates AirAsia. In 2020, auditors expressed material uncertainty over Capital A's ability to operate as a going concern, triggering Bursa Malaysia PN17 status, which requires the distressed entity to, among other things, submit a regularisation plan to the stock exchange. After obtaining several extensions, Capital A has now submitted its proposed plan and hopes to soon exit the status.

Capital A has also abandoned plans to list on the NASDAQ and has terminated its business combination agreement with special purpose acquisition company Aetherium Acquisition Corporation. The decision was made after Aetherium received a delisting determination from the NASDAQ in June.

"The termination of the business combination agreement was a strategic decision," said Fernandes. "We are laser-focused on completing the regularisation plan, which has been kept simple and mostly consists of the capital reduction process. Once the regularisation plan is successfully completed and we exit PN17 status, we will resume our plan to individually list all of our businesses."