PT AirAsia Indonesia, the Indonesian low-cost carrier, is considering restructuring its debt and raising funds through a share sale to restore its financial position, after its shares were suspended from trading since July because its latest financial statements showed negative shareholders' equity. In a document filed with the stock exchange on Wednesday, September 30, the company said AirAsia Indonesia is considering converting trade payables and lease liabilities owed to affiliates or controlling shareholders into perpetual financial instruments that can be counted as equity. The company is also weighing options to raise capital through a rights offering to existing shareholders on a pro-rata basis, or a private placement, to strengthen its capital structure. The move comes amid funding pressure on its parent, AirAsia Group Bhd., whose debt reached a record high of 4.1 billion dollars at the end of June, and which is seeking about 1 billion dollars in refinancing. Last month, Tony Fernandes, co-founder and adviser to AirAsia Group, said the group plans to inject new capital into its Indonesian and Philippine businesses, and expects new shareholders to invest in the subsidiaries. The company has not yet decided which route to take for the capital increase, and is assessing its funding needs, market conditions and the feasibility of each option together with shareholders and external advisers. The measures aim to strengthen its capital structure and help the company comply with stock exchange requirements, paving the way toward resolving the trading suspension.
AirAsia Indonesia is weighing a rights offering/private placement and debt-to-equity conversion to fix negative equity and lift its trading suspension.
Parent AirAsia Group's debt hit a record $4.1B and it is seeking ~$1B in refinancing, with funding pressure driving the subsidiary's restructuring.
