Chinese firm Rifa injects more cash into Airwork following takeover

Airwork chairman Jie Wu

China's Zhejiang Rifa appears to have injected more equity into Auckland-based Airwork Holdings just one year after fully acquiring the business.

Rifa made a full takeover for Airwork in September 2017, offering shareholders $5.20 per share having already built up a 75 per cent stake at $5.40 per share.

But since then the aircraft services business has hit some turbulence – net profit fell from $24.77m in the year to June 2017 to $14.73m in 2018 with total revenue dropping from $183m to $152m, according to the latest publically available financials.

Recent Companies Office filings show Rifa has increased the number of shares it holds in Airwork from 52.3m to 84.1m.

Chief executive Chris Hart wasn't available for comment but Continuous Disclosure understands Airwork needed about $40m of new capital to satisfy banking conditions ahead of a large corporate restructure Rifa is planning.

Notes to the accounts indicate the Rifa transaction was expected to result in approximately $200m of new equity in the business to fund future growth.

However, the proposed transaction needed to be achieved within specific timelines to meet the requirements of the company's syndicated bank facility.

"A failure to meet these timelines will result in an event of review under the company's syndicated debt facility, which may be rectified by a cash equity injection of $40 million to the company within 60 days of an event of review occurring," the accounts stated.

Rifa had the financial ability to provide this support if required, the accounts said.

The issue was flagged in Airwork's audit report which noted a material uncertainty related to the company's going concern status given that it was dependent on support from the parent company.

At June 30, 2018, Airwork had a syndicated debt facility agreement with Commonwealth Bank of Australia, Bank of New Zealand, Industrial and Commercial Bank of China, and Bank of China.

Total net debt at balance date was $230m.

When Rifa announced its takeover offer, chairman Jie Wu said there were no plans to change the company's board, management or staff, and would continue to develop Airwork as a New Zealand-based operation.

"As part of our intention, I can confirm that there are no intended changes to Airwork," he said at the time.