AAV Drops 4.6%, Analyst Points Out on Liquidation Risk and Dilution in Restructuring Plan

DBSVS pointed out visible risks on liquidation and dilution effect in the restructuring plan.

The share price of AAV fell 4.6% to Bt2.48 per share as of 10:51 in the morning session on April 28, 2021, one day after the company announced that the Board of Directors passed a resolution to approve the corporate and capital restructuring plan of the company and Thai AirAsia Co., Ltd., while expecting to list the latter into the Thai stock exchange.

 

DBS Vickers Securities (DBSVS) stated that there is further risk from liquidation to AAV’s investors in a form of share swap at a ratio of 1 AAV shares to 0.098785 Thai AirAsia shares before the delist.

 

The returning share price from AAV will be based on the IPO price of Thai AirAsia. In case of using ordinary shares of Thai AirAsia at the rate of THB 20.3925 per share to calculate AAV’s share price, the result would be THB 2.01, which is lower than the current trading price in the market. Nevertheless, the price would depend on Thai AirAsia IPO price in which DBSVS expected to be higher than THB 20.3925 per share.

Meanwhile, DBSVS also pointed out a high dilution effect in Thai AirAsia from convertible debt at a principal amount of 3,150 million baht that can be exercised in three years. The debt to equity conversion of Thai AirAsia at the amount of 3,900 million baht, and an injection of 513 million baht in principal, coupled with new ordinary shares from IPO and an allocation to Mr. Tassapon Bijleveld not exceeding 45 million shares.

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