PSE approves Cebu Pacific’s $250-million fund-raising program

The Philippine Stock Exchange approved the $250-million fund-raising plan of Cebu Airline Inc., the operator of low-cost carrier Cebu Pacific.

The PSE on Friday announced the approval of Cebu Air’s stock rights offering of US-dollar denominated convertible preferred shares.

The beleaguered airline will offer up to 337.837 million US-dollar denominated convertible preferred shares at a price of $0.74 to $0.84 apiece.

The convertible preferred shares are cumulative, non-voting, non-participating and convertible into common shares. Any convertible preferred shares that remain outstanding on the sixth anniversary of the issue date will be automatically converted into common shares on such date.

CPAir Holdings Inc., the principal shareholder which beneficially owns 66.77 percent of the airline’s outstanding capital stock, agreed to subscribe to its entitlement rights.

The shareholders of the company as of Feb. 10, 2021 will be entitled to participate in the rights offering.

Documents showed the offering period will be from Feb. 26 to March 4, 2021. The shares will be listed on the PSE on March 19, 2021.

Cebu Air engaged BPI Capital Corp. as the underwriter of the transaction.

Cebu Air is raising funds as the airline industry faces significant challenges as a result of unprecedented events brought about by the COVID-19 pandemic.

Aside from raising additional capital to strengthen its balance sheet, Cebu Air implemented a business transformation exercise that involves right-sizing of network and fleet to meet new demand and improvement of operations efficiency through process and policy enhancements and digitalization.

The airline earlier reported a net loss of P14.68 billion from January to September last year, a turnaround from the P6.76-billion net income it earned in the same period in 2019.

Cebu Air said travel restrictions, both local and abroad, led to the abrupt reduction in passenger traffic and cast uncertainty over the near-term prospects despite its market leadership.

It said the lockdowns imposed in various parts of the country also led to cancellation of flights across the group’s entire network.

Local airlines continued to reel from the impact of travel restrictions this year after the government extended the temporary ban on foreign nationals until Jan. 31, 2021 to prevent the spread of the new COVID-19 variant.

Cebu Pacific said only Filipino citizens would be accepted on flights from Dubai, Hong Kong, Nagoya (Japan), Singapore and Seoul (South Korea).

“CEB will not accept foreign nationals who originated from, transited via, or visited within 14 days prior to arrival in the Philippines, any of the 34 countries specified by the Inter-Agency Task Force on Emerging Infectious Diseases.

The share price of Cebu Air rose 1.01 percent Friday to close at P50.10.

Topics: Philippine Stock Exchange , Cebu Airline Inc. , Cebu Pacific , fund-raising plan
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