AirAsia Bhd has Secured US$443 million dual-tranche private funding to renovate planes grounded during the epidemic, according to sources.
According to individuals who asked not to be named because they were discussing private things, Ares Management Corp. and Indies Capital Partners Pte Ltd, two private credit funds, contributed a US$200 million tranche for the aircraft’s renovations to get them back in the air. The remaining US$243 million was contributed by aircraft lessors to refinance lease obligations.
The structured agreement involving AirAsia is just another example of how private financing is becoming more and more popular in Asia and how, by providing higher, flexible rates of return, it is quickly challenging traditional lending.
The finance, which is arranged as revenue-linked privately placed bonds, is guaranteed by future ticket sales from AirAsia’s important routes, according to the sources.
AirAsia’s foreign counsel is A&O Shearman, while its financial advisor is Evercore Inc. Lenders are represented by Milbank LLP.
Read also- Lebanon-Based Cairn Surgical has Secured $4.5 Million in Funding
Ares opted not to respond. Requests for comments from A&O Shearman, Evercore, Indies, and Milbank were not immediately answered. AirAsia attested to the transaction’s validity.
According to the persons, the most recent securitized agreement involving AirAsia has a four-year tenor and a private credit tranche that pays an annual rate of 11%. The lessor piece has a two-year maturity and yields 7% annually. Although signed, the agreement is not yet funded.
Read also- Israel-Based Fanton Fantasy Football has Secured $1 Million in Seed Round Funding
According to the persons, following negotiations, the conditions of the transaction have changed from the initial stage, which was announced in the second half of last year.
Private credit is nothing new to AirAsia. According to a statement at the time, the carrier’s engineering and maintenance affiliate, Asia Digital Engineering Sdn Bhd, raised US$100 million from investment firm OCP Asia Ltd in April 2023.
The low-cost airline’s goal to grow internationally over the next ten years is supported by its plans to extend its medium- to long-haul network to Europe and the West Coast of North America.
About AirAsia
AirAsia is a low-cost airline. Fleet and routes make it Malaysia’s largest airline. More than 166 locations in 25 countries are served by AirAsia international flights.
