KUALA LUMPUR, September 18, 2024 -- Capital A has announced that the Extraordinary General Meeting (EGM) circular detailing the proposed disposal of its aviation business to AirAsia X (AAX) has been cleared by Bursa Malaysia. This key procedural step paves the way for an EGM to be convened in the next three weeks, when shareholders will have the opportunity to approve the proposal.
With the clearance from Bursa Malaysia for the issuance of the circular, Capital A moves forward with its strategic plan to restructure and facilitate a business-centric valuation of its aviation and non-aviation entities. Following shareholders' approval at the upcoming EGM, the aviation disposal proposal will proceed to court for approval of the proposed distribution to shareholders via capital reduction.
The successful completion of this transaction will lead to the formation of the new AirAsia Group, which combines both short-haul and long-haul operations under one umbrella. With focused management and a well-defined strategic direction, the aviation group will ensure operational efficiency, robust connectivity, expanded market share, and ultimately enhanced profitability.
Questions around this news
What does Bursa Malaysia’s clearance of the EGM circular allow Capital A to do?
The clearance allows Capital A to issue the circular describing its proposed aviation-business disposal to AirAsia X. The release says this procedural step paves the way for an Extraordinary General Meeting to be held in the next three weeks, where shareholders can consider and vote on the proposal.
What approvals are still required for the proposed aviation-business disposal?
Shareholders first have the opportunity to approve the proposal at the upcoming Extraordinary General Meeting. If they do, the proposal will then proceed to court for approval of the proposed distribution to shareholders through a capital reduction. The release describes these as steps ahead of completion, rather than a completed transaction.
What is a capital reduction in a corporate transaction?
A capital reduction is a formal change that decreases a company’s share capital. Depending on the structure and applicable rules, it can be used to return value to shareholders, reorganize a company’s finances, or support a corporate restructuring. It may require shareholder and regulatory or court approval.
What does PN17 status mean?
PN17 refers to a regulatory classification for companies facing financial or other conditions specified under the applicable listing rules. A company in this category is generally required to take steps to regularize its position and meet the relevant requirements to exit the status.
Tony Fernandes, CEO of Capital A said, “We are beyond excited about the next step of the aviation transformation. We are set to redefine the aviation future with the birth of the new AirAsia Group, where AirAsia and AAX operations unite to deliver increased profitability and returns for the shareholders.
He continued, “This transaction is a key part of our long-term strategy to unlock unparalleled value for our shareholders and position Capital A for sustainable growth across all its business verticals. By separating our aviation and non-aviation businesses, we can better focus on building synergies within each entity, driving growth, and maximising shareholder returns. Importantly, this will also allow Capital A to have a clean balance sheet and focus on finalising its regularisation plan to exit Practice Note 17 (PN17) status. We look forward to receiving the support of our shareholders at the upcoming EGM as we embark on this transformative journey.”
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In brief
Capital A says Bursa Malaysia has cleared the circular for its proposed transfer of the company’s aviation business to AirAsia X. The clearance allows the company to convene an Extraordinary General Meeting within the next three weeks, where shareholders can consider the proposal. If shareholders approve, the transaction would then require court approval for a proposed distribution through a capital reduction. Capital A says the restructuring is intended to separate its aviation and non-aviation businesses and support distinct valuations and management focus. The company says completion would bring AirAsia and AirAsia X operations together in a new AirAsia Group. CEO Tony Fernandes also said the separation is intended to help Capital A pursue its regularisation plan and leave PN17 status.
Key takeaways
- Bursa Malaysia cleared the circular for Capital A’s proposed aviation-business disposal to AirAsia X.
- Capital A expects to hold an EGM within the next three weeks for shareholders to consider the proposal.
- Shareholder approval would be followed by a court application concerning a proposed distribution through capital reduction.
- Capital A says the transaction would combine AirAsia and AirAsia X operations in a new AirAsia Group.
Earlier from Capital A
- Capital A accelerates sustainability focus, records efficiency gains amidst aviation industry recovery
- Capital A announces new 5-year service contract for CEO Tony Fernandes
- Capital A ESG ratings climb following successful revamp of its sustainability strategy
- Capital A Berhad signs Letter of Intent with NASDAQ-listed Aetherium Acquisition Corp for business combination
- Strengthening the global aviation ecosystem, Capital A, Garuda Indonesia Group forge game-changing, value-driven partnerships to transform Asean travel and logistics
