Regional Express (Rex) has signed an agreement with PAG Regulus Holdings (PAG) that will see the airline receive up to $150 million exclusively for the launch of its domestic major city jet operations in March next year.
The funding comprises first-ranking, senior secured convertible notes. An initial funding tranche of $50 million will be drawn down towards early January 2021, with the balance of the funding available for Rex to draw down over the following three years.
PAG’s funding is subject to customary conditions, including Rex’s shareholder approval, which the airline intends to seek at its annual general meeting in early January.
The funding is also subject to approval from the Foreign Investment Review Board and other required regulatory authorities.
Upon completion, PAG will be entitled to nominate two directors to the Rex board.
Rex’s executive chairman Lim Kim Hai: “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 the investment firm was impressed with Rex’s track record in Australia’s regional aviation sector.
“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,” he said.
“PAG is excited to partner with Rex on this expansion.”