Australian regional carrier Rex announced Thursday (19 November) that it has signed a funding agreement worth up to A$150 million (US$109 million) with PAG Regulus Holdings to help it set up regional operations to compete with Virgin Australia and Qantas. An initial funding tranche of A$50 million will be drawn down towards early January 2021 with the balance of the funding available for drawdown over the following three years.
Upon completion of regulatory approval, PAG will be entitled to nominate two directors to the Rex board. Leadenhall Corporate Advisory has been appointed as an independent expert to report on whether the funding transaction is fair and reasonable to Rex’s shareholders. This will be included as part of the Notice of Meeting and Explanatory Memorandum to be sent to shareholders to allow them to consider and vote on the Funding transaction, which will occur at Rex’s company’s AGM. These documents are expected to be sent to shareholders in early December with the AGM in early January.
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 look forward to tapping into the experience and expertise of PAG’s nominated directors whose professionalism I have grown to respect over the last few months of extensive discussions. Preparations for our domestic operations are proceeding to plan with our first Boeing 737-800NG aircraft delivered on 5 November 2020. Our crew will carry out training on the aircraft over the next three weeks before the CASA proving flight on 2 December 2020. We anticipate CASA approval shortly after. Five other similar aircraft will be delivered from next month to March 2021. We will debut on the Sydney – Melbourne route with three aircraft on 1 March 2021 and will ramp up to five aircraft by Easter that will see flights to other capital cities. Once the initial services are well established, we aim to progressively grow our fleet to cover all the major cities in Australia.”
PAG Chairman and CEO Weijian Shan said “we have been impressed with Rex’s established track record in regional aviation in Australia. Rex’s plan to provide Australia’s major cities with affordable and high-quality air travel is consistent with their disciplined and focused approach over the past 18 years. PAG is excited to partner with Rex on this expansion.”