Lucio Tan’s Buona Sorte to inject P12.75 billion into PAL Holdings

Tycoon Lucio Tan is pumping billions of pesos into PAL Holdings Inc., the parent firm of Philippine Airlines (PAL), in a bid to keep the embattled flag carrier financially afloat.

In a disclosure to the Philippine Stock Exchange on Friday, PAL Holdings said that Tan’s Buona Sorte Holdings - the majority shareholder of PAL - is injecting $225 million or equivalent to P12.75 billion in “cash by way of fresh additional capital.”

The private placement by Buona Sorte will support the increase of the holding firm’s authorized capital stock to P30 billion from P13.5 billion as part of fund-raising efforts “towards sustainable profitability.”

“The P12.75-billion private placement represents the full and final payment of Buona Sorte’s subscription to 10,200,000,000 new common shares of PAL Holdings at a subscription price of P1.25 per share in favor of Buona Sorte,” PAL Holdings said.

In September, the flag carrier filed for bankruptcy in the United States, as part of its restructuring plan.

Under agreements with creditors, the flag carrier will secure some $505 million for its recovery plan upon its exit from the process — the first tranche will be a $250-million facility debt to be pared down in the next five years, and the second tranche worth $255 million will be converted into equity.?

Early this month, PAL secured the approval of a United States bankruptcy court to fully access its “debtor-in-possession” financing amounting to $505 million.

Debtor-in-possession financing is a type of financing meant for firms which filed for bankruptcy protection or Chapter 11 filing, which involves restructuring of loans while being allowed to continue operating to eventually pay off debts.

PAL is confident it will exit the Chapter 11 or corporate restructuring process by the end of the year, but revenues are unlikely to return to pre-COVID-19 levels until after 2025. — VBL, GMA News