The Regional Express share price is soaring higher today as the company announced an update on its pending foreign investment.
The post Why the Regional Express (ASX:REX) share price is flying higher today appeared first on The Motley Fool Australia. –
The Regional Express Holdings Ltd (ASX: REX) share price is trading close to its 52-week high after an overseas interest gained investment approval today. After an early surge, the Regional Express share price is trading up 1.32%, at $2.31.
This is the latest piece of good news for the regional airline that has seen its share price soar in recent weeks. Brushing aside COVID-19 impacts that largely decimated the travel sector this year, the Regional Express share price is up an astonishing 97% since the start of the year.
What happened today?
This morning, leading Asian investment firm PAG confirmed it had been granted Foreign Investment Review Board approval to acquire an interest in Regional Express.
The approval was sought in relation to a subscription agreement entered into with PAG on 19 November. Shares in Regional Express are up 49% since news of that agreement transpired.
Under the deal, Rex will issue up to $150 million convertible notes to PAG to fund its domestic operations. The notes can be converted to ordinary shares at $1.50, so it’s worth noting that PAG could potentially hold up to 47% of Rex’s shares if fully converted.
Despite today’s good news, other regulatory approvals are still needed. The company is awaiting its high capacity air operator’s certificate (HCAOC), and the outcome will likely be known by 18 December. The transaction is also subject to shareholder approval at Regional Express’s next AGM.
What now for the Regional Express share price?
The company is Australia’s largest independent regional and domestic airline. In exciting news for shareholders, Regional Express recently announced it will be offering flights from Melbourne to Sydney from $79. These flights will begin with 6 planes in March next year.
In addition to the airline, Regional Express comprises wholly owned subsidiaries Pel-Air Aviation and two pilot academies in Wagga Wagga and Ballarat.
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Motley Fool contributor Daniel Ewing has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.