KUALA LUMPUR: Shares of AirAsia Group Bhd's rise in active trade on Bursa Malaysia yesterday following news that 10 per cent of the airline's stake will be offered to a South Korean conglomerate.
The stock was at one point Bursa's second most active, edging up a high of 91.5 sen before the gain was capped at 86.5 sen at 10.15am, up nearly five per cent from its 83 sen closing on Wednesday.
AirAsia ended the day 3.6 per cent or three sen higher to close at 86 sen, being seventh most active stock with 175.11 million shares exchanging hands.
AirAsia reportedly was selling 10 per cent of the company's shares to SK Corp, South Korea''s third largest conglomerate, at RM1 a share.
The share placement was expected to raise RM334.2 million.
AirAsia was tight-lipped over the purported placement.
Sources close to AirAsia would look at ways to improve stock price and market capitalisation, adding that a share placement could a way.
"In the current environment, the company is talking with various parties to ensure it stays afloat," a source said.
SK Corp, which primarily involves in the energy and telecommunications industries, had a total asset of US$257.9 billion in 2018.
Analysts said a cash injection would help AirAsia to prepare for operations post Covid-19.
Global airlines were running out of cash to sustain operations, amid the pandemic which had idled their fleet of aircraft, they added.
TA Securities aviation analyst Tan Kam Meng said the purported placement's proceeds of over RM300 million would not be enough for AirAsia to weather the Covid-19 storm.
"But (the placement) can provide quick cash without having to get shareholders' approval to solve liquidity for the group.
"We remain neutral on the news and hopeful that the government will provide financial aid to the local airlines," he told the New Straits Times.
Meanwhile, AirAsia Group has been presented with proposals to raise capital to strengthen its equity base and liquidity from various parties including investment bankers, lenders as well as potential investors.
The low-cost carrier said this in turn would help the company weather the storm caused by the Covid-19 pandemic, it said in an exchange filing to Bursa Malaysia yesterday.
Additionally, AirAsia Group said it has ongoing deliberations with a number of parties for joint-ventures and collaborations that may result in additional investments in specific segments of the group's business.
"We are currently evaluating these proposals and may soon reach a decision as to the final form (which may be a combination thereof) as well as the amount to be raised."
The company said it was unable to divulge any information at this stage so as not to jeopardise any of the proposals due to the confidential nature of the discussions with the various parties.
"However, we will ensure to make the necessary follow-up announcements as and when appropriate as well as seek the various approvals (if required) in order to undertake such fund raising exercise," it added.