‘Capital A to Sell Entire Holdings in AirAsia, AirAsia Aviation Group for RM6.8 billion – Business Analysis’

Capital A Bhd has recently announced a significant move in its business strategy by entering into a conditional share sale and purchase agreement with AirAsia Group Sdn Bhd (AAG). The agreement entails the divestment of Capital A’s entire equity stake in AirAsia Aviation Group Ltd (AAAGL) and AirAsia Bhd (AAB) for a total sum of RM6.8 billion.

Under the terms of the agreement, Capital A will be selling AAAGL for RM3 billion and AAB for RM3.8 billion to AAG. Both AAAGL and AAB are wholly-owned subsidiaries of Capital A. As part of AirAsia X Bhd’s (AAX) proposed internal reorganization, AAG will take over AAX’s listing status before the completion of the proposed disposals.

In addition to the cash transaction, Capital A has put forth a proposal to distribute new ordinary shares in AAG, valued at approximately RM2.20 billion, as consideration shares for the sale of AAAGL. These new shares will be distributed among the entitled shareholders of the group.

The group revealed in a document filed with Bursa Malaysia that the RM3 billion consideration for the sale of AAAGL will be satisfied through the issuance of 2.30 billion new AAG shares at an issue price of RM1.30 per share. Furthermore, AAG will be assuming Capital A’s RM3.8 billion debt owed to AAB on the completion date of the AAB sale.

Upon completion of the disposals, Capital A anticipates a pro forma gain of approximately RM4.69 billion from the sale of AAAGL. This gain is expected as a result of the remeasurement of the remaining interest in AAAGL, based on Capital A’s audited financial statements for the financial year ended December 31, 2022. Similarly, the sale of AAB is projected to yield a pro forma gain on disposal of approximately RM6.07 billion.

Once the transaction is finalized, Capital A’s business portfolio will primarily consist of aviation services and digital businesses. This includes Asia Digital Engineering, SuperApp, Teleport, and BigPay, which handle the super app and logistics segments of the group.