Capital A Bhd, which owns Malaysia’s budget airline AirAsia, will not be proceeding with the club facility of up to MYR500 million ($119.38 million) under a so-called Danajamin Prihatin Guarantee Scheme (DPGS) as the company is unable to accept or fulfill certain conditions required.

The conditions include a joint and several guarantee from its founders Tony Fernandes and Kamarudin Meranun, as well as for the company to submit a regularisation plan which will also be approved by the stock exchange Bursa Malaysia, Capital A said in a regulatory filing on Thursday.

The regularisation plan is to remedy Capital A’s consolidated shareholder equity to be above MYR40 million and 25 percent of share capital (excluding treasury shares) or for the company “to obtain a time extension to provide the regularisation plan from Bursa Malaysia for the matching tenure of the DPGS Club Facility.”

“Capital A is exploring other available debt financing alternatives with acceptable terms suitable to the operations and financing requirements of the company,” the company said in the filing.

Capital A, formerly known as AirAsia Group Bhd, has received approval from Danajamin Nasional Bhd for the club facility in October last year. The loan, 80 percent of which is guaranteed by the government, is earmarked for working capital purposes, which will support staff costs and key operating expenses such as aircraft maintenance.

The loan is supposed to be disbursed as part of a COVID-19 economic stimulus package from the Malaysia government.

Danajamin Nasional, the country’s sole financial guarantee insurer, is half-owned by the Finance Ministry of Malaysia.

In January, Capital A has been categorized as a financially distressed company after its request to extend its relief period was denied by the stock exchange.

The group has been aggressively building its digital businesses and its ASEAN Super App over the last two years as most of AirAsia’s planes were grounded due to the ongoing COVID-19 pandemic. It has introduced ride-hailing services, food delivery, beauty e-commerce, among others. Its FinTech unit, BigPay, has also submitted its application to secure a digital banking license in Malaysia last year.

The group has hoped to build its super app, modeling regional tech giants such as Grab’s and Gojek’s super apps which offer a variety of services including ride-hailing, food delivery, and payment services.

Capital A posted a net loss of MYR3.12 billion ($744 million) in 2021, narrowed from MYR5.11 billion ($1.22 billion) in 2020, mainly due to strict cost control measures. The revival of the airline industry, particularly Asean countries gradually easing travel restrictions has contributed to the group’s reported growth in passengers carried and commendable load factor at 80 percent in the last quarter of 2021. This helped improve its financial position, the group said in February.

On Tuesday, Malaysia Prime Minister Ismail Sabri Yaakob announced that the country will reopen its borders to international travelers starting April 1.

He said visitors and Malaysian returnees, who are fully vaccinated are not required to undergo quarantine upon arrival. They, however, must undergo a RT-PCR test two days before departure and a rapid test (RTK) upon arrival.

AirAsia aims to become Asia’s largest food delivery, ride hailing company – report