afr.comAsian PE giant to bankroll Rex expansion plans
Rex had been exploring ways to fund the expansion, including raising equity from new and/or existing shareholders, selling aircraft or a deal with a financial investor. Rex told investors in July it had term sheets from three different lessors about a sale-and-leaseback of its 60 unencumbered aircraft for $30 million.
It is understood PAG's private equity unit emerged as the best option to raise the bulk of the funds after a comprehensive review, which also involved talks with other private equity firms.
Asia-based heavyweight in private equity
PAG is a big player in private equity and investment management in Asia, with about $US40 billion in assets held on behalf of institutional investors from all over the world.
PAG's private equity dealmakers have turned their attention to Australia in recent years, picking up
Oporto and Red Rooster franchisor Craveable Brands and specialist cake retailer The Cheesecake Shop.
For Rex, a $150 million convertible note will form a big part of the group's capital structure.
The company recorded $328.1 million turnover in the year to June 30 – a year heavily affected by the COVID-19 pandemic – and a $19.4 million loss. It was in a net cash position at June 30, according to a preliminary final report handed down to shareholders last month.
Law firm Baker McKenzie advised Rex, while MinterEllison did the legal work for PAG.
Rex shares were halted from trade on Monday morning to allow the convertible notes deal to be finalised. The company's shares last traded at $1.09, which valued the group's equity at $120 million.
Rex's new services are expected to build on its existing infrastructure in capital city airports,
deputy chairman John Sharp said in June, and would seek to fly passengers between capital cities on Australia's east coast.
The mooted expansion comes at a time when most Australian aircraft is grounded as a result of border lockdowns and travel restrictions.
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