The Indonesian affiliate of Malaysian budget carrier AirAsia Bhd is planning to convert debt into shares to meet a new government rule on equity.
The debt will be converted into preference shares which carry no voting rights, Sunu Widyatmoko, President Director of PT Indonesia AirAsia, told Reuters in a text message.
He declined to disclose the amount to be converted as it is pending approval from the Indonesia investment coordinating board.
Indonesia AirAsia is among several airlines that have until Sept. 30 to meet Indonesia’s “positive equity” rule after the country’s transport ministry extended the deadline from July 31.
The ministry previously said 13 airlines had “negative equity” – meaning assets used to secure loans were worth less than the outstanding balance of the loans. It said those airlines risked suspension if they did not turn equity positive.
AirAsia shares jumped as much as 5.4 percent in early trade, outperforming the benchmark index which was down 0.6 percent.- Reuters