Rex Airlines has been slugged $66,000 after its deputy chairman told members of the media of its plans to expand domestic flights before updating the market.
Corporate regulator ASIC fined Rex after it revealed in an interview with the Australian Financial Review its plans to expand routes as part of a major expansion of its domestic operations.
In the interview in May 2020, deputy chairman John Sharp told AFR journalist Tony Boyd of the airline’s plans to invest $200m to start new capital city services.
Following the publication of the interview Rex was placed in a trading halt.
In its market update Rex revealed it had been approached by several parties “interested in providing the equity needed for Rex to start domestic operations in Australia”.
“The preliminary estimate of equity required is in the vicinity of $200m and the structure of equity raising is yet to be determined,” it said.
Rex deputy chairman John Sharp’s interview caused the problem. Picture: Jerad Williams Following the announcement Rex opened at $1.26, before rising to a high of $1.31 and closing at $1.19, a 32 per cent jump on its closing price the previous trading day.
The $66,000 fine was based on the market capitalisation when the conduct occurred.
ASIC said it found Regional Express Holdings had failed to comply with its continuous disclosure obligations after the interview.
“Following the release of the article on May 12, 2020, ASX contacted Rex about the article and Rex was placed in a trading halt,” ASIC said.
“Later that day, Rex disclosed to ASX that it was considering the feasibility of commencing domestic operations.”
ASIC found there were reasonable grounds to conclude that Rex was in breach by failing to inform the ASX “that it was considering the feasibility of commencing domestic operations in addition to its regional operations”.
But Rex executive chairman Lim Kim Hai maintained its position that “it did comply” with its obligations to inform the market.
“Be that as it may, Rex has elected to comply with the infringement notice and pay the penalty of $66,000 on a no-admission basis,” the airline said in a market update.
The ASIC fine hit follows a move by the regulator to restrict Rex from issuing a reduced content prospectus and using exemptions for reduced disclosure in fundraising documents until December 14, 2021.