Cebu Pacific to raise $250M to pay debts, passenger refunds
The Gokongwei family’s Cebu Air Inc., operator of budget airline Cebu Pacific, is pushing through with a $250-million share sale next month to pay off debts, aircraft lease payments and passenger refunds.
This is part of an ongoing “business transformation” program amid the severe impact inflicted upon the aviation sector by the COVID-19 pandemic.
Cebu Air said the latest fundraising initiative would involve the sale of convertible preferred shares to existing stockholders, otherwise known as a rights offering.
The sale itself will run from Feb. 26 to March 4 this year at a price range of $0.74 and $0.84 per share.
Cebu Air has yet to announce the number of shares and the entitlement ratio but provided a preview on how the money will be spent.
Cebu Air said about $100 million would be used to pay back affiliate JG Summit Philippines Ltd. for advances and $72.3 million for debt repayments due within this year.
Another $71.3 million will be used to pay operating leases for its fleet while $6.4 million will be set aside for general corporate purposes and passenger refunds.
Overall, the program will boost Cebu Air’s balance sheet as carriers around the world struggle with financial losses during the health crisis.
“This places the corporation in a better position to respond to this harsh reality,” Cebu Air said in its stock exchange filing.
Cebu Air, which has reduced its workforce during the pandemic, said the business transformation also includes adjusting its fleet size and network to meet new demand, cost-cutting and other improvements in “operations efficiency through process and policy enhancements and digitalization.” INQ
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