God damn it!

I was and remain of the viewpoint that AirAsia is going to rock and roll coming out of this period and I was looking forward to participating in an equity recap of AAV and ride the recovery trade in 2H21 and throughout 2022. But the clever folks there decided to keep the upside for themselves…

So what happened?

27 April 2021 – https://www.set.or.th/set/pdfnews.do?newsId=16194806133870&sequence=2021046663
The company announced the following: (or you can scroll down and read my summary)
Approved the Corporate and Capital Restructuring Plan of the Company and its subsidiary, Thai AirAsia Co., Ltd. (“Thai AirAsia”), (hereinafter referred to as “Restructuring Plan”), and proposed that the Company’s shareholders’ meeting consider and approve the Restructuring Plan

The new investor (who is not a connected person of the Company and Thai AirAsia) will provide a loan to Thai AirAsia, which is the main operating subsidiary of the Company, in a maximum amount up to THB 3,150 million, with no interest charged thereon. The provision of the loan will be in the form of a convertible loan agreement or convertible bonds (Zero Coupon issued at 100 percent nominal value), as the case may be. The investor shall be able to exercise the right to convert the loan agreement or bonds into ordinary shares of Thai AirAsia within the agreed period and at the agreed price. Initially, the convertible loan agreement or convertible bonds, as the case may be, are expected to have a term of approximately 3 years from the date the loan is received. The conversion period is expected to be after Thai AirAsia has received approval to offer shares in an Initial Public Offering (IPO) from the Office of the Securities and Exchange Commission (the “Office of the SEC”) and received approval in principle from the Stock Exchange of Thailand to list its ordinary shares on the Stock Exchange of Thailand (hereinafter referred to as the “Conversion Conditions”). The conversion price is expected to be as follows: the principal amount of approximately THB 3,150 million which can be converted into ordinary shares of Thai AirAsia at the rate of THB 20.3925 per share (having par value at THB 0.5 per share)

If the plan to list Thai AirAsia as the listed company on the Stock Exchange of Thailand is successful, the major creditor of Thai AirAsia, i.e. AirAsia Investment Limited, currently holding 19,600,000 shares (having par value at present of THB 10 per share) or equivalent to 392,000,000 shares (par value will be changed to THB 0.5 per share) , representing 45 percent of the total paid up capital of Thai AirAsia at present, must convert all debts which is the loans to be used for repayment of debt consisting of aircraft lease debts, aircraft maintenance debts fuel debts and trademark debts, owned by Thai AirAsia, amounting not exceeding THB 3,900 million, into equity.

For the listing of Thai AirAsia as the listed company on the Stock Exchange of Thailand in accordance with the Restructuring Plan, Thai AirAsia will change par value of its shares  from the existing par value of THB 10 to THB 0.50. This is to enhance the liquidity and distribution of the Company’s shares to investors as well as making shares of Thai AirAsia to be more attractive among the investors.

Simple English Summary

  • Old Ticker: AAV
  • New Ticker: TAA
  • AAV will be delisted and they’ll list TAA
  • A magical and mysterious new investor is coming out of the woods to give a THB 3 bn loan to Thailand AirAsia.
    • The end game is 11% of the new company, TAA, shares and 2 board seats.
  • New IPO shareholders ~3%
  • Are existing AAV shareholders screwed?
    • Well the shares of AAV will be transferred into 55% of TAA, so no. And TAA should have some THB 10 bn in new cash, enough for ~2-3 years.
    • And if you still think its a bad deal? Look at THAI shareholders.
  • Sounds like this is a great idea:
    • Well many things could go wrong, the SET/SEC could delay the IPO and your capital is stuck for who knows how long. I’ll relook again in 6-12 months when this is filed, or if AAV tanks some ~80%
Chart 1: 5 year AAV share price.

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