AirAsia's founders could be taking the airline private - Reuters

Air Asia could be taken private, according to Reuters.

It cited unnamed sources claiming AirAsia founder Tan Sri Tony Fernandes was talking with bankers to take the budget airline private, because the company’s declining stock price had put $200 million worth of loans, borrowed against AirAsia's shares, at risk.

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The privatisation plan supposedly under discussion could see Tony and his business partner Datuk Kamarudin Meranun selling their AirAsia stake to a special purpose vehicle, to allow them to pay off the loans, said one of the sources.

The report said Tony and Kamarudin took out the loans from Credit Suisse and CIMB, backed against their 19 percent indirect holding in AirAsia. The money was supposedly used to fund private ventures.

Reuters cited two sources saying that the loans were taken to help finance Tony’s purchase of English football club Queens Park Rangers in 2011, and to build up the Caterham Formula One team.

The existence of the loans was not publicly disclosed as the transaction is private.

The report said that according to two sources, while there is no evidence Tony and Kamarudin would be unable to repay the money, a fall in AirAsia's share price may have led to a breach of the loans' collateral terms.

AirAsia saw its share price drop mid-year after Hong Kong-based research firm GMT Research said the carrier had used transactions with associate companies to inflate earnings. It said the company needed to be recapitalized, triggering a sell-off that by late August had shrunk the value of the founders' stake to around $100 million.

AirAsia responded at that time by saying it had a strong balance sheet and did not need additional capital. Its shares have partially regained ground since then, and the carrier’s market value is currently at around $1 billion.

Reuters said all sources it interviewed for the article had declined to be identified because the discussions are private. It said Tony and Kamarudin did not reply to emails or phone calls, and a Malaysia-based spokeswoman at AirAsia declined comment.

A Hong Kong-based spokesman at Credit Suisse also declined to comment, while a CIMB spokeswoman did not respond to requests for comment.

Yesterday, Fernandes spoke exclusively to Astro AWANI Thursday about the airline's new flight route to Luang Prabang, Laos after it obtained a route clearance from the country's authorities.