Cebu Pacific operator raises P12.5B from stock rights offer to finance debts, refunds

Gokongwei-led Cebu Air Inc., the operator of budget carrier Cebu Pacific, said Wednesday it has successfully raised P12.5 billion from its issuance of peso-denominated convertible preferred shares, to finance its financial obligations.

In a disclosure to the Philippine Stock Exchange, Cebu Air said it has ended the stock rights offer of 328,947,368 non-voting, non-participating convertible preferred shares as an “entitlement rights” at a price of P38 per entitlement right.

“Accordingly, the Entitlement Rights have been fully subscribed and paid,” the company said.

The listing date for the offer shares is tentatively set on March 29, 2021.

The rights carry a 6% dividend yield per annum.

The total proceeds of the offer amounting to P12,499,999,984.000 will be used to “strengthen the company’s balance sheet by providing liquidity to address its financial liabilities.”

The amount raised from the offer will be used to finance the following financial obligations:

•     P4.805 billon allocation for repayment of an advance by JG Summit Philippines Ltd.
•     P3.913 billion allocation for aircraft operating lease payments due in 2021
•     P3.338 billion allocation for principal debt repayments due in 2021
•     P384 million allocation for general corporate purposes, which are primarily for passenger refunds in case cash flows from operations become insufficient “as a consequence of the COVID-19 pandemic’s impact to health and travel related concerns”

Cebu Air has appointed BPI Capital Corp. as sole global coordinator, bookrunner, and underwriter of the offer.

Last week, the airline signed a P16 billion loan deal with several domestic banks in a bid to sustain its operations, which was adversely affected by the COVID-19 pandemic.—AOL, GMA News