KUALA LUMPUR: The loan of half a billion ringgit guaranteed by AirAsia Group Bhd (AAGB) should provide it with sufficient liquidity and working capital to scale up its operations once interstate and international borders reopen.

PublicInvest Research said in a report yesterday that the Malaysian government’s approval is a welcome boost to the group’s overall fundraising strategy to meet its cash flow needs.

“In addition to the group’s waiver of rights up to RM1bil, which is expected to be completed in December, AAGB will have sufficient liquidity and working capital to scale up operations when interstate and international borders reopen in the near future.

“Nonetheless, we understand that the group continues to explore other available financing options and / or corporate exercises to ensure sufficient liquidity and further strengthen its capital structure.”

PublicInvest Research said the loan would also provide AAGB with breathing space and leeway to expand its business.

“The funding is intended for working capital purposes, which will support personnel costs and major operating expenses such as aircraft maintenance and fuel costs,” he said.

Meanwhile, MIDF Research said the loan would help the company get back on its feet, now that its fundraising efforts are back on track.

“AAGB had completed two installments of its private equity investment exercise in the first quarter of 2021, during which it raised RM 336.5 million through the issuance of 470.2 million new shares. The remaining 198.2 million shares will be issued by the end of the year.

“Meanwhile, BigPay, a digital portfolio company of AirAsia, has managed to secure up to US $ 100 million (RM418 million) from South Korean conglomerate SK Group.”

MIDF Research said that AAGB also proposed to undertake a waiver of rights issue up to RM1.02bil, in which applications for issue and listing were submitted to the Securities Commission and Bursa Securities.

The AAGB announced on Tuesday that it had received approval from Danajamin Nasional Bhd for an 80% guaranteed loan of up to RM500 million.

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