AirAsia may embark on fundraising route

AirAsia Group Bhd is considering a rights issue, debt financing and even a private placement to raise more capital until air travel demand picks up. The group is also actively exploring other potential monetisation opportunities including hiving off part of its digital business as raising cash is vital for its survival. It plans to raise RM2b to RM2.5b and the funding should come in anytime from December to February 2021, analysts said. AirAsia is expected to secure loans of RM400m under the Danajamin government programme and RM300m from a bank in Sabah. AirAsia would still need an additional RM1.5b to RM1.8b. UOB Kay Hian expected a 1-for-1 rights issue priced at about 50 per share or a mixture of rights issue and convertible debt.. “Given that the book value at the end of the third quarter 2020 was RM0.35, investors could be lukewarm to equity issuance at a substantial premium to book value," UOB Kay Hian said. However, TA Research “see high chances for a successful fundraising exercise now due to vaccine optimism.’’ “We are mindful of the urgent needs for airlines to recapitalise their balance sheets but there could be a steep downwards adjustment to AirAsia’s share price in the event of a highly dilutive equity-raising exercise."<br/>