Capital A rejected Danajamin’s RM500m loan due to unreasonable terms, says CEO Tony Fernandes

KUALA LUMPUR (March 11): Tan Sri Tony Fernandes, managing director of Capital A Bhd (formerly known as AirAsia Group Bhd), clarified that the group has decided not to proceed with a club installation of up to 500 million RM under the Danajamin Prihatin guarantee scheme as he found some of the conditions imposed unreasonable.

“We have decided not to proceed with the club facilities as we believe some of the conditions imposed were unreasonable. The required approvals from Bursa Malaysia were not within our control and although we requested an extension of time to provide a regularization plan, ultimately our application was denied,” he said in a statement Friday, March 11.

Capital A fell into Practice Note 17 (PN17) status on January 13 after its request for an extension for an 18-month relief period beyond January 7 was rejected by Bursa. It has up to 12 months to submit a regularization plan to the regulatory authorities, failing which trading in its securities will be suspended and delisting will follow.

Thusday, The edge reported that Capital A was unable to secure the RM500m club facility under Danajamin Nasional Bhd as the former disagreed with a condition that its co-founders namely Fernandes and Datuk Kamarudin Meranun, would be the loan guarantors. Fernandes and Kamarudin hold a combined 24.64% stake in Capital A through Tune Air Sdn Bhd (12.41%) and Tune Live Sdn Bhd (12.23%).

In the latest statement, Fernandes also assured that he and Kamarudin are staying with the group for the long term.

“Datuk Kamarudin and I remain committed to the recovery of Capital A after being actively involved in leading the group through this crisis day in and day out for the past two years. We have also personally injected RM257.3 million – on the RM974.5 million rights issue which was finalized on December 31, 2021 – to support the turnaround plan,” he said.

“However, while we are willing to provide the requested personal guarantees in addition to our previous cash support through the rights issue, such a request for us to guarantee everyone’s exposure is unseemly for a listed company. on the stock exchange given that we are only two of many. A shareholding that also includes institutional investors,” he added.

Fernandes reiterated that Capital A will continue to explore other financing alternatives more suited to its operations and needs, while noting that the group’s fundraising strategy remains firmly on track to support operations until in 2022 and support the recovery of its airline.

“As international borders continue to reopen in all of our key markets, we look forward to returning to pre-pandemic capacity on many of our popular domestic and international routes by the end of this year, in turn returning to profitability and bringing value to our shareholders again in the near future,” he said.

The RM500m Danajamin-guaranteed loan was part of a RM2.5bn fundraising exercise for recapitalization after the airline was hit hard by the Covid-19 pandemic.

In a stock market filing on Thursday, Capital A said it would not proceed with the Danajamin loan because it was “unable to accept and/or meet certain conditions” set by the national financial guarantee insurer.

Danajamin had also requested Capital A to submit a regularization plan and obtain Bursa’s approval to remedy its negative equity above RM40 million and 25% of its registered capital or obtain an extension of time to provide the regularization plan of the exchange for the same permanence as a club facility.

Capital A shares closed down 2.5 sen or 3.8% at 63.5 sen on Friday, valuing the group at RM2.64 billion based on 4.16 billion shares outstanding. The stock has fallen 21.6% since the start of the year.

Read also:
Capital A can’t get RM500m Danajamin loan because company won’t condition founders to act as guarantors

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