Regional Express (Rex) airline executives, including executive chairman Lim Kim Hai, sought a $10 million cash injection from PAG, a private equity firm, as the company faced dwindling profits and critically low cash reserves. The Australian Securities and Investments Commission (ASIC) has launched legal action against Rex and its directors for allegedly misleading investors about its profitability in February 2023.
Less than two months after Regional Express told shareholders the company would end the 2023 financial year in profit, executive chairman Lim Kim Hai desperately began searching for a financial lifeline.
But court documents allege Rex had not prepared a forecast for the 2023 financial year, had recorded an operating loss of $30 million in the first half, and knew that it generally generated lower revenue in the second half. Lim’s email to his fellow directors included a spreadsheet showing Rex had recorded a before-tax loss of $7.2 million in February and an estimated before-tax loss of $2.5 million for March 2023.
Days later, Lim, Sharp, Khotkar and Pan received Rex’s “Weekly Worm Report”, which showed the airline’s monthly passenger revenue in January, February, March and April was down compared with the previous year.ASIC has accused Lim of drafting and approving the statement released to the Australian Securities Exchange on February 28, 2023, and failing to take steps to ensure the market had accurate information.
Airlines Rex Financial Crisis Misleading Investors ASIC
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