Sunday, September 20, 2009

AirAsia new shares likely priced from RM1.33 to RM1.40

15 September 2009

PETALING JAYA: Trading in AirAsia Bhd shares is suspended today pending an announcement on the results of the bookbuilding exercise, including the price for the new shares arising from its private placement programme.

In a filing with Bursa Malaysia, the low-fare airline said the suspension would be until 12.30pm.

Last week, shareholders approved the private placement proposal, which would allow AirAsia to strengthen its balance sheet and increase financing flexibility while reducing its net gearing.

Passengers boarding an AirAsia aircraft at KLIA. AirAsia’s private placement will allow the carrier to strengthen its balance sheet

The exercise will involve up to 481.1 million new shares, or 20% of the airline’s issued and paid-up capital, with the offer price not more than 10% discount to the five-day weighted average market price prior to the price fixing date.

It was reported earlier that AirAsia aimed to raise about RM500mil and had approached foreign investors in Singapore, Hong Kong and London.

Chief executive officer Datuk Seri Tony Fernandes could not be reached for comment.

Quoting a deal term sheet, Reuters yesterday reported that AirAsia was expected to raise up to RM560mil by selling 400 million shares via a private placement and had set an indicative price range of RM1.33 to RM1.40 a share for the sale.

CIMB Group and Credit Suisse are the joint placement agents for the exercise.

OSK Investment Bank analyst Ng Sem Guan noted that the airline’s share price “was holding quite well” in the last couple of days ahead of the announcement”.

“AirAsia could be attracting foreign investors who do not own the shares currently,” he said.

He added that the proceeds from the private placement would significantly reduce the company’s gearing level although it would dilute the shareholding of major shareholders.

Meanwhile, Kenanga Research estimated AirAsia’s earnings per share would be diluted by 17% while net gearing would be reduced to 2.3 times from 3.2 times currently.

“The proceeds raised will be earmarked for partial debt settlement and as working capital,” it said in a report.

It noted that the management had yet to hedge fuel cost as prices were relatively stable.

The research house has revised upwards its earnings forecast for the airline for years ending Dec 31, 2009 and 2010.

This is in anticipation of lower finance cost and higher ancillary income.

The stock was last traded at RM1.41 per share.

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