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Regional Express Holdings (ASX:REX) - Executive Chairman, Lim Kim Hai
Executive Chairman, Lim Kim Hai
Source: Cairns Post
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  • Regional Express Holdings (REX) is currently negotiating a $150 million investment from PAG Asia Capital to fund its expansion into city-to-city services
  • The regional airline will use the funding to commence flights between major Australian cities, placing it in direct competition with some of air travel’s biggest names, including Qantas and Virgin Australia
  • The proposed funding would begin with a tranche of $50 million, with the remaining $100 million spread out over the following three years
  • In exchange for the funding Regional Express will issue convertible notes to PAG, which amount to a 48 per cent stake in the airline
  • If negotiations prove successfully and the necessary approvals are received, the company expects funding to be finalised around December 2020
  • Regional Express closed 4.13 per cent in the green for $1.14 per share

Regional Express Holdings (REX) is currently negotiating a $150 million investment from PAG Asia Capital to fund its expansion into city-to-city services.

The regional airline will use the funding to commence flights between major Australian cities, placing it in direct competition with some of air travel’s biggest names, including Qantas and Virgin Australia.

However, like many in the aviation industry globally, Australia’s major airlines have struggled in recent months, with worldwide quarantine restrictions grinding international travel to a halt.

With that in mind, smaller, nimbler airlines such as Regional Express believe now is the right time expand out from regional flights and into the more competitive and lucrative flights between cities like Brisbane, Sydney and Melbourne.

The proposed funding would begin with an initial tranche of $50 million, with the remaining $100 million spread out over the next three years. In exchange for the funding Regional Express will issue convertible notes to PAG, that, if converted, amount to a 48 per cent interest in the airline.

However, the deal is still in the early stages, and PAG still needs to complete its own due diligence, as will Australia’s Foreign Investment Review Board. Regional Express shareholders will also need to approve the deal, which the company intends to address at its upcoming shareholder meeting in December this year.

Rex’s Executive Chairman, Lim Kim Hai, said he was encouraged by the progress being made with PAG.

“With PAG’s support, I have every reason to believe that Rex can successfully launch its domestic major city jet operations,” he said.

“As a well-established carrier with an impeccable track record, I am confident that Rex will deliver to Australians an alternative major city domestic service that is safe, reliable and affordable. Rex’s affordable fares will support Australia’s economic rebuild and recovery efforts,” he added.

If negotiations prove successfully and pending approval are received, the company expects funding to commence around December 2020.

Regional Express closed 4.13 per cent up for $1.14 per share.

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