Capital A to exit PN17 status by 1Q 2025

SEPANG: Capital A Bhd submitted its regularisation plan to Bursa Malaysia today to uplift its Practice Note 17 (PN17) status as early as February 2025 and pave the way for a brighter future.

PN17 is a designation issued by Bursa Malaysia for listed companies that are in financial distress or do not meet specific financial conditions.

CEO Tan Sri Tony Fernandes said submission of the regularisation plan marks a positive step in Capital A’s journey to exit PN17 status.

“(To exit PN17) … anything from three to four months, I’m hoping by February or March. It’s a simple plan. It’s just capital reduction,“ he told reporters in a special announcement during AirAsia MOVE’s Christmas celebration at KLIA Terminal 2 today.

He said the regularisation plan, which includes a capital reduction of up to RM6 billion, is designed to strengthen Capital A’s balance sheet by eliminating the losses incurred during the Covid pandemic and reflect the true value of the company’s underlying assets in Capital A.

“Not many companies successfully exit PN17, and those that do often take many years to achieve it. What makes this milestone even more remarkable is that we have reached it while navigating the unprecedented challenges brought on by Covid.

“Once the plan is approved, Capital A will follow AirAsia X’s success in exiting PN17 almost a year ago. This will stand as one of the proudest moments of my career – a testament to the resilience and determination of our team.

“With all approvals in place, we are confident in executing our strategy to deliver sustainable growth and long-term value, building a stronger and more resilient Capital A,“ Fernandes said.

The group has outlined key steps to complete its financial regularisation plan, currently awaiting approval from Bursa Malaysia. Following this, an extraordinary general meeting will be convened to secure shareholder approval. Upon obtaining shareholder approval, the plan will be submitted to the High Court of Malaya for confirmation.

Successful completion of these steps will enable the group to exit PN17 status, signifying the conclusion of its financial recovery efforts.

Capital A remains committed to regulatory compliance and will focus on mitigating risks, including market competition and operational disruptions.

In October, shareholders approved Capital A’s disposal of its aviation business to AirAsia X, and the group outlined a proposed plan to regularise its financial position. The plan includes a capital reduction to offset the group’s accumulated losses.

The final plan is designed to strengthen the group’s financial standing, enabling future growth and strategic expansion.

Fernandes said now that Capital A has submitted the regularisation plan after disposing of its aviation business, the group can focus on growing its strong companies within Capital A: Capas (aviation services), Teleport and MOVE, a digital and branding company.

Kenanga Investment Bank Bhd underscored Capital A’s strategic moves, including shareholder approval for the disposal of its aviation business at an extraordinary general meeting in October,

Subject to regulatory approvals, the disposal is expected to be completed by January 2025, paving the way for the company to exit PN17 status by the first quarter of 2025.

Kenanga continues to favour Capital A because it has benefited from the recovery in air travel post-pandemic.

The group’s growing digital business leverages the strong AirAsia brand and its existing client base, and its dynamic, visionary leadership should help the company overcome its current financial difficulties, the research firm noted.