Exclusive: Beaten-down AirAsia taps investors to take company private - sources

Tue Oct 6, 2015 6:05pm EDT
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By Anshuman Daga and Saeed Azhar

SINGAPORE (Reuters) - Founders of Asia's largest budget carrier, AirAsia, are sounding out investors to take the company private in a management-led buyout, after a critical research report knocked its shares to a seven-year low, people familiar with the matter said.

AirAsia Bhd co-founder Tony Fernandes is talking to banks to secure financing for the transaction, which could be launched over the next few months, said the people, who did not want to be identified as the discussions were confidential.

At Tuesday's closing level of 1.25 ringgit - exactly the price at which its shares were sold to institutional investors in an initial public offering more than a decade ago - AirAsia is valued at 3.48 billion Malaysian ringgit ($796 million).

Investors were spooked when Hong Kong-based GMT Research questioned AirAsia's accounts in a report in June, driving the airline's shares to their lowest levels since the global financial crisis in 2008.

Group CEO Fernandes, who has led AirAsia's rise from a two-plane operation in 2002 to a billion-dollar business, has been spending more time at AirAsia since then, putting his other businesses and sporting interest to one side.

GMT's allegation that AirAsia uses related-party transactions with loss-making associate carriers to boost its earnings pummeled the airline's shares by as much as 64 percent, and the stock remains down around 40 percent from its levels in early June.

Fernandes has steadfastly defended the company's finances and outlook and said the market was undervaluing AirAsia.

A source familiar with the matter said a challenge for any outside investor looking to invest in AirAsia was that the airline's revenues were largely in Malaysian ringgit, which has lost 20 percent this year, while its costs were in U.S. dollars.   Continued...

Tony Fernandes, CEO of AirAsia, walks near an AirAsia Airbus A320 at the domestic airport in Manila in this May 23, 2014 file photo.  REUTERS/Romeo Ranoco/Files