* To sell 400 mln shares at 1.33-1.40 rgt/shr -term sheet
* Share sale has an upside of 75 mln shares -term sheet
* AirAsia wants to use proceeds from sale to cut debt
(Adds pricing details, stock suspension, share price)
By Soo Ai Peng
KUALA LUMPUR, Sept 14 (Reuters) - Malaysia’s AirAsia (AIRA.KL), Southeast Asia’s largest budget carrier by fleet size, is expected to raise up to 665 million ringgit ($189.6 million) in a new share placement as it seeks to cut its debts.
Demand for full-fare carriers has been hit by the economic downturn, boosting discount airlines. AirAsia said last month proceeds from the share sale would be used to reduce its debt, which has risen sharply following aggressive capacity expansion.
AirAsia will sell 400 million new shares, representing 16.8 percent of its existing share capital, at 1.33 ringgit ($0.380) to 1.40 ringgit a share, according to the deal term sheet obtained by Reuters, to raise up to 560 million ringgit.
But the sale also has an upside of 75 million shares on top of the 400 million shares offered, the term sheet said, meaning AirAsia could potentially raise a total of 665 million.
CIMB (CIMB.KL) and Credit Suisse are joint placement agents for the exercise and bookbuilding will be completed on Sept. 15.
AirAsia stock closed down 0.7 percent on Monday at 1.41 ringgit. Stock exchange regulator Bursa Malaysia said AirAsia shares would be suspended on Tuesday pending an announcement.
Regional budget carriers such as AirAsia and Jetstar Asia Airways have either added capacity or increased flight frequencies to cope with higher demand. [ID:nKLR406078]
Analysts in Malaysia said last month that AirAsia’s tight cash flow and high debt level was worrying given its commitment to fund aircraft deliveries. It last month deferred the delivery of eight Airbus A320 EAD.PA aircraft to 2014 from 2010, which analysts said signals potential overcapacity in the future. (Additional reporting by Julie Goh; Editing by David Chance and Lin Noueihed)