Australian airline Regional Express Holdings (Rex) said Tuesday (22 September) that it was in advanced talks with Asian investment firm PAG Asia Capital for up to A$150 million (US$108.4 million) of funding to launch jet services between major cities. The flights would compete against those offered by the country’s dominant airlines, Qantas Airways and Virgin Australia from 1 March 2021. It would be a major expansion for Rex, which currently operates on less competitive regional routes like Sydney to Wagga Wagga and Adelaide to Port Lincoln using a fleet of ageing Saab 340 turboprops with 30 to 36 seats.
The notes will be convertible at A$1.50 per share, subject to certain adjustments. Based on Rex’s current issued share capital, if the A$50 million tranche is fully converted into shares, PAG would hold approximately 23 percent of Rex’s total issued shares and if the full A$150 million is drawn down and fully converted, PAG would hold approximately 48 percent of Rex’s issued shares. Upon Completion, PAG will be entitled to nominate two directors to the Rex board.
Rex’s Executive Chairman Lim Kim Hai said “PAG is a well-respected and highly successful investment group which manages more than US$40 billion on behalf of major global institutional investors. I am encouraged by the progress of Rex’s negotiations to date with an investor of PAG’s reputation and experience. With PAG’s support, I have every reason to believe that Rex can successfully launch its domestic major city jet operations.”
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