Yeti Airlines Adds Rs 2.27 Billion Capital, Asian Life's Ownership Diluted to 29.85%
Yeti Airlines has raised Rs 2.27 billion in share capital through a premium private placement. This has significantly improved the company's debt-to-equity ratio and financial health. Asian Life Insurance's ownership has been diluted from 46.82% to 29.85%.
Kathmandu. Yeti Airlines Limited has raised an additional share capital of Rs 2.27 billion through a premium private placement. With the entry of new promoters and the addition of capital, the company's financial health has improved significantly, according to credit rating agency Infomerics Nepal.
The company raised share capital from new investors at a rate of Rs 150 per share, including a Rs 50 premium. Earlier, Asian Life Insurance had also purchased shares in Yeti Airlines at a premium price.
A portion of the capital added with premium from new investors has been used to repay the company's old debt and for maintenance of aircraft engines. The company has repaid Rs 310 million of its long-term loan from the additional capital. After partial repayment of the loan, there has been an improvement in its debt-to-equity ratio. The company's overall gearing ratio has decreased from 49.81 times in FY 2079/80 and 4.45 times in FY 2080/81 to 1.49 times in FY 2082/83.
The company has converted a loan of USD 27.19 million equivalent in foreign currency into a Nepali currency loan. Converting the US dollar loan into Nepali currency at once forced the company to bear a loss of Rs 372 million at once. However, as long as the loan remained in US dollars, there was a problem that the loan principal would increase with the rise in the US dollar's value. Now that the loan is entirely in Nepali currency, an increase in the dollar's value will not add pressure to the company by increasing the burden of loan principal. This decision will have a positive impact on the company's profits in the long run.
The ratio of total external liabilities to net assets has improved from 4.88 times in FY 2080/81 to 1.60 times. The company's debt service coverage ratio has increased from 1.13 times to 1.88 times.
With the new capital structure and the arrival of promoters, the ownership percentage of old and founding shareholders of Yeti Airlines has contracted. Previously, Asian Life Insurance had 46.82 percent institutional share ownership in Yeti Airlines, which has now decreased to 29.85 percent after the addition of new capital. However, Asian Life, which has invested Rs 1.56 billion 1 lakh 50 thousand 376 including premium price, still remains the largest single shareholder. The ownership of the company's Chairman Lhakpa Sonam Sherpa has decreased from 25.03 percent to 15.96 percent. Similarly, the ownership of Managing Director Chanda Sherpa has fallen from 20.06 percent to 12.79 percent.
The company is preparing to issue ordinary shares worth Rs 2.10 billion in the near future. After the IPO issuance, the company's capital structure will become stronger and the amount of debt will decrease further, according to Infomerics Nepal's analysis.