Ok, I was thinking for a moment. Hey I could be wrong hor.
Anyway as per yesterday's posting Comments On AirAsia Stock Sale
- Piggy bank cash balances now is at 223.991 million. Total loans stood at 6.934 Billion!!!!!!!
Now assuming the full 500 million raised from the stock sale is used to par down AirAsia debts, it would mean a cash balances of 223.991 million versus a reduced loans of 6.4 Billion!
Which is still incredibly high, yes?
And considering that AirAsia is going to have to take delivery of more new planes, surely this is not cutting it, yes? I mean the total debts is still going to increase a lot!
Now since AirAsia Says That "There Is A Huge Appetite For Our Shares...", I am wondering....
So how about AirAsia doing a more BIGGER stock sale?
How about a 1 for 1 rights issue?
Yeah, instead of getting new investors, why don't AirAsia current shareholders, fork out more money?
As mentioned, a 20% stock sale or placement could raise some 500million, just imagine how much a 1 for 1 rights issue could raise?
How about this?
At least this way AirAsia could really raise a whole lot of money!
And at least, it also shows how much AirAsia's own shareholders are really optimistic about AirAsia's future prospects.
Just food for thought lah.
If you don't like it, just spit it out. :D
AASIA is going down. If there was a way to short this stock, I would.
ReplyDeleteNo company can operate with this level of debt, and still hope to survive. Unless they also have a mountain of cash, which they don't.
This is just Tony Fernandez putting on a brave CEO face. He could have fainted from sheer stress, not just exhaustion.
Yeah.
ReplyDeleteAnd with AirAsia obligation to take delivery of new planes, this mountain of debt is simply going to increase.
Yes, it's rather wicked but I would really like to see AirAsia doing a 1 for 1 rights issue.
Why?
This would see all the majority shareholders doubling their stakes in AirAsia.
And if it does happen, it would be a massive vote of confidence saying that the majority shareholders are really optimistic about the company's future.
i believe there can be few reasons why AirAsia would want to do a placement rather than rights:
ReplyDelete1. Some investors might want huge block of AirAsia's share. These investors might be strategic investors or long term investors. It can be costly to purchase the shares from market (i.e. pushing up the price especially when you buy a lot), hence placement can be cheaper.
2. Major shareholders have no intention to subscribe to the rights. They might not have the cash, or they just do not want to invest more in AirAsia.
AhBeng,
ReplyDeleteRegarding your 2 points.
1. Placement of 20%.
I understand there might be some interested block buyers but I do believe that it's more crucial from AirAsia point of view to evaluate the amount raised from such a stock sale. 20% equates to around 500 million.
And 500 million compared to a net debt of 6.9 billion isn't really anything much. More so when you consider the new planes obligations.
Crudely put, why bother with a 20% placement when such an exercise won't help much?
And more so, it would only hurt its minority shareholders feelings over the company as the 20% placement would cause a dilution of 20% in AirAsia's earnings per share.
2. Point 2. You said "Major shareholders have no intention to subscribe to the rights. They might not have the cash, or they just do not want to invest more in AirAsia."
If you ask me, either reason, gives a rather negative vibe. Especially if the reason is that the major shareholders do not want to invest MORE money in AirAsia.
Folks would want to ask why?
Like do these major shareholders have utter no confidence in their own company?
For example, Tony had repeated said bullish things about his airlines.
Now if Tony refused to put in more money in the company where he had publicly made all the bullish statements, what and how does it reflect on AirAsia and Tony?
Those are my views and I could be wrong.
http://www.btimes.com.my/Current_News/BTIMES/articles/20090707093709/Article/index_html
ReplyDeleteI seriously hope my understanding of the English language is not terribly flawed but from my understanding of what was said on 1st July 2009 was that there were plenty of interested parties.
Huge appetite for its shares mah.
With all the huge appetite for AirAsia's shares, why sell to just one fund?
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Today's Business Times:
AirAsia Bhd, Southeast Asia’s largest low-cost airline, rose for the first time in three days in Kuala Lumpur trading after saying it may sell all of a planned new share issue to a single investor.
The stock added 1.8 per cent to RM1.12 at 9:04am.
AirAsia, which is planning to issue as much as 20 per cent more stock, is considering selling the stake to a single institutional fund or a strategic investor as part of a plan to reduce debt, chief executive officer Datuk Seri Tony Fernandes said in an interview late yesterday.
A strategic investor might be a private equity firm or a partner in the tourism industry, said Fernandes. He said he plans to meet potential buyers this month and the share sale should be completed in early August. -- Bloomberg