AirAsia Group has revealed plans to raise up to MYR1.024 billion ringgit (USD244 million) through a renounceable rights issue, with the funds to be diverted to the group’s working capital and operational costs, as well as to further boost efforts to diversify through its AirAsia Digital businesses.

The cash call to its shareholders includes seven-year redeemable convertible unsecured Islamic debt securities (RCUIDS), based on two RCUIDS with one warrant for every six AirAsia shares held, the group outlined in a Bursa Malaysia filing. Each RCUIDS security is also convertible to one new AirAsia share on a one-to-one basis.

The proposed rights issue is expected to be completed in the fourth quarter of 2021, it added, and the AirAsia (AK, Kuala Lumpur Int'l) parent “is also well progressed in discussions to secure a number of other fundraising initiatives.”

AirAsia Group CEO Tony Fernandes pledged that “the exercise will provide a platform to seek a fresh funding injection from shareholders to maintain liquidity during the downtime in flying and fuel growth of the key non-airline digital businesses.”

AirAsia seeks “unconditional and irrevocable written undertakings” for a full subscription from group co-founders Fernandes and Kamarudin Meranun and their investment vehicles Tune Live and Tune Air. Tune Air holds a 13.25% stake in the company, Tune Live 13.06%, while Fernandes and Meranun themselves have direct stakes of 0.04% and 0.05%, respectively.

Collectively, the two, who therefore control a 26.4% equity interest in AirAsia Group, are expected to inject MYR257.27 million (USD61.38 million) in fresh capital into the company. The other substantial shareholder, Stanley Choi Chiu Fai, a Hong Kong-based entrepreneur and professional poker player, holds 8.53% as of June 30. He subscribed to a private placement earlier this year.