The board of PAL Holdings Inc. approved an increase in capital by P16.5 billion to support the operations of Philippine Airlines (PAL) that was severely affected by COVID-19 pandemic.
PHI told the stock exchange its board approved the proposal to increase the authorized capital stock from P13.5 billion to P30 billion.
The company said the capital hike will be supported by a private placement by Buona Sorte Holdings, Inc. (BSHI), the parent company Trustmark Holdings Corp., in the amount of P12.75 billion, which will be received by PHI in cash by way of fresh and additional capital.
BSHI, along with Cosmic Holdings Corp. and Trustmark, which collectively comprise the Lucio Tan Group, will own 89.45 percent of PHI after the capital hike.
The fresh capital from BSHI will be infused to PHI’s subsidiary PAL.
PHI expects to receive a total of $255 million or P12.75 billion in cash from BSHI before the end of 2021,
In addition, BSHI will extend a five-year term loan to PAL amounting to $250 million, completing the $505-million working capital requirement of the airline under its proposed plan of reorganization submitted to the United States Bankruptcy Court.
The airline expects to exit from the Chapter 11 bankruptcy proceeding by end of the year.
PAL also filed for recognition in Pasay Court as required under the Philippine Financial Insolvency and Rehabilitation Act of 2010.
PAL earlier reported a total comprehensive loss of P18.04 billion in the first half, down 18 percent from a P22.02-billion loss in the same period last year.
Consolidated revenues in the six-month period declined 51 percent to P18.04 billion from last year’s P36.82 billion because of the effect of the COVID-19 pandemic that started in mid-March of 2020.