Lucio Tan alone bankrolling PAL revival

Billionaire Lucio Tan is flying solo in steering Philippine Airlines (PAL) to recovery as he prepares to extend a fresh P12.75-billion financial lifeline to the flag carrier while Japanese airline group ANA Holdings, PAL’s second-largest shareholder, holds back from increasing its investment.

In a Philippine Stock Exchange filing on Friday, parent firm PAL Holdings Inc. said the money would be raised through a private placement or direct sale of 10.2 billion new shares to its ultimate controlling stockholder, Tan-owned Buona Sorte Holdings Inc.

The offer shares were valued at P1.25 apiece, which was an 80-percent discount to their last price before trading of PAL Holdings was suspended by the PSE on June 16.

Absent from the transaction was ANA Holdings, whose 9.5-percent stake in PAL Holdings would be diluted by almost half given the issuance of new shares.

An ANA spokesperson confirmed on Friday it had no plans of participating in the offer while affirming the Japanese group’s commitment to their long-term partnership with PAL.

No change

“There is no change to our view on PAL, the company remains a very important strategic partner and our investment in PALHD [PAL Holdings] is a long-term strategic investment,” the spokesperson said in an email to the Inquirer.

ANA Holdings, owner airline giant All Nippon Airways, acquired its stake in PAL Holdings via a $95-million investment in 2019.

The arrival of the COVID-19 pandemic the following year, however, had forced airlines around the world to scale back operations and conserve finances given the industry-wide downturn.

Despite the global health crisis, Tan said he would continue supporting PAL through its present woes.

The flag carrier’s survival was also tied to the outcome of a Chapter 11 creditor projection plea, which was largely dependent on additional capital from Tan, other lenders and investors.

Based on court filings, Tan is bankrolling most of the $505 million (P25.62 billion) debtor-in-possession financing facility, a core feature of PAL’s restructuring.

Apart from the removal of $2.1 billion in debts, PAL is seeking to raise at least $150 million in an exit facility when it emerges from the Chapter 11 process.

Even with its reduced stake, ANA Holdings will keep its seat on PAL Holdings’ board with Junichiro Miyagawa nominated as director for the following year, the PSE filing showed.

Also nominated to PAL’s board were Tan’s daughter, Sheila Pascual, and Jerome Su Tan and Bienvenido Laguesma as independent directors. The rest of the nominees were Lucio Tan, Carmen Tan, Lucio Tan III, Gilbert Santa Maria and Johnip Cua.