No Way Out Of PN17 For AirAsia

thecekodok

 It's hard to fly high like this.


According to CGS-CIMB Research, the firm had to maintain a ‘reduction’ branch on AirAsia Group Bhd (AAGB) at 60.5 sen with a lower target of 9 sen after checking the airline’s RNAV calculation.


The research firm stated in a note dated January 21 that they were not sure how AAGB would come out of the Practice Note 17 (PN17) rating without a significant increase in equity capital.



CGS-CIMB added that since AAGB's auditors expressed significant uncertainties related to the ongoing efforts in its audit report for the FY20 accounts, AAGB needs to have shareholders' equity of at least 50% of its paid-up share capital.


He added that one of the options for AAGB to reduce its gap is for AAGB to get shareholders' and court approval for a capital reduction which means that RM5.8 billion of retained losses (as of September 30, 2021) can be offset by a paid -up share capital of RM8.5 billion left. the remaining paid -up share capital of RM2.7 billion.


Meanwhile, AAGB will continue to struggle to exit PN 17 status with a huge RM4.55 billion gap in shareholders' funds even with potential capital reductions other than RM650 million warrants and RM778 million in the remaining RCUIDS may not be converted into shares soon. with shares below the conversion price.


Meanwhile, AAGB shares declined 1.65% or 1 sen to 59.5 sen with a share value of 4.27 million.

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