AirAsia X shows court creditors’ support for restructuring plan

AirAsia X shows court creditors’ support for restructuring plan
The AirAsia X Bhd is seeking to restructure $15.87 billion of debt. (Reuters)
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Updated 14 January 2021

AirAsia X shows court creditors’ support for restructuring plan

AirAsia X shows court creditors’ support for restructuring plan
  • Supportive lessors said they wanted to continue discussions with the budget airline and potential new investors

KUALA LUMPUR: Most of AirAsia X Bhd (AAX)’s lessors support a restructuring plan, and the Malaysian airline has received interest from potential investors for fundraising after reorganization, court documents filed this month show.
In emails attached to the court filings, supportive lessors said they wanted to continue discussions with the budget airline and potential new investors, seeking more equitable terms and new commercial arrangements.
The affidavits come after more than a dozen creditors filed to intervene with its proposed court-supervised restructuring, with lessor BOC Aviation Ltd. and airport operator Malaysia Airports Holdings Bhd arguing that AAX is “hopelessly insolvent.”
Planemaker Airbus also filed a lawsuit last month saying it could lose more than $5 billion worth of aircraft orders if the low-cost, long-haul carrier proceeded with the plan.
AAX’s senior legal counsel, Shereen Ee, said in court documents seen by Reuters that 15 out of 20 aircraft lessors were not in favor of AAX liquidating, and three other interveners – Airbus, Rolls-Royce Group and BNP Paribas – were “not objecting” to the restructuring plan.
Lessors in favor of a restructuring include Macquarie Aircraft Leasing Services and Aircastle, according to the documents. Rolls-Royce, Macquarie Aircraft Leasing Services and Aircastle did not immediately respond to requests for comment.
An Airbus spokesman declined to comment, saying that the company was continuing discussions but that the details are confidential. AirAsia X also declined to comment.
BNP Paribas – which is a trustee acting on a creditor’s instructions – declined to comment.
Aircastle Asia Pacific executive vice president Nigel Harwood told AAX in an email that his firm was not seeking liquidation of the airline, according to the court filings.
“We look forward to working with you to arrive at a revised commercial arrangement once we understand your future business plan with the introduction of new investors,” he said.
Macquarie’s email said it was willing to support a recapitalized AAX and make a restructured lease agreement on condition that the airline has a detailed business plan, credible third-party investors and that lessors have a meaningful say, according to the filings.
AAX said it had received 10 letters from Malaysian and Singaporean corporations and high net worth individuals indicating interest to participate in its proposed fundraising exercise, according to an affidavit.
The 10 includes Tune Group Sdn Bhd, owned by AirAsia Group Bhd co-founders Tony Fernandes and Kamarudin Meranun. Tune is the largest AAX shareholder, with a 17.83 percent stake.
AAX said it also received interest from a public-listed financial group and the subsidiary of another, both preferring to be unnamed.
AAX, an affiliate of AirAsia Group, last month said it planned to raise up to $49.49 million by issuing shares to new investors after its debt restructuring.
The airline is seeking to restructure $15.87 billion of debt. Its accrued debt amounts to $554.28 million, without taking into consideration contingent debts such as its large aircraft order book with Airbus.
Some lessors have argued the Airbus orders should be excluded. However, AAX said the contingent debts must be dealt with and will be reduced by the re-negotiated leases and other commercial contracts.
AAX estimated that lessors that continue with the airline post-restructuring would be able to recover approximately 44 percent-66 percent of their lease rental loss under new agreements.


Indonesia campaign helps SMEs enter Saudi market

Indonesia campaign helps SMEs enter Saudi market
Updated 29 min 41 sec ago

Indonesia campaign helps SMEs enter Saudi market

Indonesia campaign helps SMEs enter Saudi market
  • They will be the main target of the export initiative, which is estimated by the Indonesian Ministry of Trade to be able to generate $60 million

JAKARTA: Indonesia has launched a campaign to help small firms in the country compete for millions of dollars-worth of food trade in Saudi Arabia.

The government aims to help small and medium-sized enterprises (SMEs) improve the quality and competitiveness of their products to meet the Kingdom’s required standards, Indonesian trade and commerce officials have said.

Under normal circumstances, before the coronavirus disease (COVID-19) pandemic, around 1.5 million Indonesians a year make the pilgrimage to Saudi Arabia to perform Hajj and Umrah and hundreds of thousands work in the Kingdom.

They will be the main target of the export initiative, which is estimated by the Indonesian Ministry of Trade to be able to generate $60 million.

To meet the Saudi food regulator’s standards, the Indonesian Chamber of Commerce (Kadin), the Ministry of Trade, and the Ministry of Cooperatives and Small-Medium Enterprises have teamed up to assist SMEs in improving products such as bottled chili sauce, soya sauce, coffee, tea, and sugar that are in highest demand among Indonesians in Saudi Arabia.

Kadin chairman, Rosan Roeslani, told Arab News: “We have facilitated five small-medium enterprises that produce soya sauce to obtain Saudi Food and Drug Authority approval for distribution, while nine tea and coffee producers are in the pipeline to also obtain a license. We have also submitted the application for four bottled chili sauce producers.”

While travel and pilgrimage restrictions remain in place due to the COVID-19 outbreak, he said that the time before things get back to normal will be used to prepare the SMEs — which contribute 60 percent to the country’s gross domestic product and employ up to 90 percent of its workforce — for expansion into the Saudi market as soon as the pilgrimage sector resumes.

“We still have time to groom them as there are many aspects such as hygiene, and consistency in their product quality and quantity that they need to improve,” Roeslani added.

In 2014, the Ministry of Religious Affairs issued a regulation obliging catering companies that provided food and drink to Indonesian pilgrims in Saudi Arabia to source their products from Indonesian producers whenever possible.

Indonesia’s vice religious affairs minister, Zainut Tauhid Sa’adi, said that as each Indonesian pilgrim received food from caterers an average 75 times during his or her pilgrimage, demand was high but supply in Saudi Arabia remained limited and similar products from India and Thailand had been used instead.

Kasan Muhri, director general for export development at the Ministry of Trade, told Arab News that the program to prepare the SMEs had been in the making since 2017 and officials eventually decided to launch it this year despite the COVID-19 restrictions.

“Just because there are few Umrah pilgrims now and this year’s Hajj remains uncertain, it does not mean that the market is gone.

“People from around the world would still go to Saudi Arabia to perform the pilgrimage, not just Indonesians, so we are doing this to anticipate the market when the economy revives, and things are recovered. We don’t want to be left behind,” Muhri said.

Besides food and beverage products, officials say they are also looking into the possibility of exporting items such as goodie bags, prayer beads, and other pilgrimage accessories made by Indonesian SMEs.