The Gokongwei family’s Cebu Air Inc. is moving forward with a fundraising plan to shore up its resources during the COVID-19 pandemic.
The publicly listed operator of budget airline Cebu Pacific said on Friday its board of directors approved the sale of $250-million preferred shares that could be later converted to common shares.
The convertible preferred shares would be sold via a stock rights offering to existing shareholders.
Cebu Air, part of conglomerate JG Summit Holdings Inc., has yet to issue details on the full offer size, entitlement ratio, price and timetable.
The money is expected to strengthen its balance sheet given the devastating impact of the global health crisis on the airline business.
“The airline industry faces significant challenges as a result of unprecedented events outside the control of the corporation brought by the COVID-19 pandemic,” Cebu Air said.
“Travel restrictions imposed by various governments, both local and abroad, have led to abrupt reduction in passenger traffic for the corporation and casts uncertainty over the near term prospects of the corporation despite its market leadership,” it added.
The fundraising is among a series of steps the airline is taking to ensure its survival.
Cebu Air said it was also “right-sizing [its] network and fleet to meet new demand, and [improve] operations efficiency through process and policy enhancements and digitalization.”
Last August, the group also cut about 25 percent of its workforce given the dramatic reduction in flights.
Following a special stockholders’ meeting on Nov. 20, Cebu Air approved a plan to increase its authorized capital stock to P1.74 billion from 1.34 billion. This would also support the creation of a new class of convertible preferred shares.