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AirAsia signs shareholders agreement and share subscription agreement for AirAsia India

19-Apr-2013 10:36 AM

AirAsia Berhad stated (18-Apr-2013) its wholly-owned subsidiary AirAsia Investment Limited executed a shareholders agreement and a share subscription agreement with local Indian partners, Tata Sons Limited and Telestra Tradeplace Private Limited. The shareholders and share subscription agreements are formalised for the purpose of forging a JV cooperation between AirAsia, TSL and Telestra to establish a LCC in India based on the AirAsia business model. TSL and Telestra have incorporated a company in India for the JV under the name of AirAsia (India) Private Limited (AirAsia India). Currently, AirAsia India has an authorised share capital of INR500.5 million (USD9.3 million) divided into 50,050,000 equity shares of INR10 each. AirAsia has now signed:

  • a Share Subscription Agreement to subscribe for 24.5 million ordinary shares representing forty-nine percent (49%) of the paid-up capital in AirAsia India; 
  • a Shareholders Agreement with TSL (which holds 30%) and Telestra (which holds 21%) to govern the relationship between the parties;
  • a Brand Licence Agreement with AirAsia India where the company grants AirAsia India a non-transferable, non-assignable, exclusive licence to use the AirAsia brand in India for the period of the Shareholders Agreement in consideration for a fee as agreed between the Company and AirAsia India.

The salient terms of the shareholders agreement are as follows:

  • In compliance with Indian Aviation laws on foreign shareholding AirAsia will hold a 49% shares in AirAsia India through AAIL while TSL will hold 30% and Telestra will hold 21%;
  • Under the Brand Licence Agreement, AirAsia grants the rights for the use of the AirAsia brand to AirAsia India;
  • Under the JV, AirAsia will provide technical, operational and commercial support on an arm’s length basis to AirAsia India to ensure commercial, operational, branding and service level uniformity throughout existing AirAsia’s operations;
  • Subject to receipt of requisite No-Objection Certificate (NOC) approval from the India Ministry of Civil Aviation, AirAsia India shall apply for the Air Operators Permit (AOP) from the Directorate General of Civil Aviation of India (DGCA) to operate aircraft in its fleet.

Details of the capital injection are as follows: The JV will require capitalisation in two tranches of the total authorised capital in AirAsia India with capitalisation by AAIL amounting to a total of USD14.7 million AAIL shall subscribe an initial capitalisation of INR245 million (USD4.4 million) in AirAsia India upon signing of the Shareholders Agreement. AAIL shall subscribe a second capitalisation of approximately USD10.3 million immediately following granting of the AOP. Each of the capitalisation by AAIL above represents 49% of the paidup capital in AirAsia India. The issued and paid up share capital of AirAsia India after the first tranche subscription of shares by AAIL, TSL and Telestra is INR500.5 million (USD9.17 million). AirAsia will use internal funds for its share of the equity investment. [more - original PR]