Cebu Air Inc. is seeking to raise up to $500 million additional capital to ensure that it is well-positioned to recover from the impact of COVID-19.
The Gokongwei-led airline said it gave notice to the Philippine Stock Exchange that it will be seeking approval for the issuance of up to $250 million in new convertible preferred shares, as well as another $250 million in privately placed convertible bonds.
The transactions will be taken up in a special shareholders meeting to take place on November 20, 2020.
The new convertible preferred shares will be made available to all stockholders, including JG Summit, giving opportunity for all investors to participate; while the privately placed convertible bonds, will be made available to a limited number of reputable international investors.
“We need to create a longer runway for CEB so that we can continue providing affordable and accessible air transport services for everyjuan,” said Lance Gokongwei, President and CEO of Cebu Pacific and JG Summit Holdings, Inc.
The airline is raising this capital as part of its multi-pronged approach to working with capital providers, creditors, suppliers and all other stakeholders, especially its employees, to further strengthen its financial position in the midst of this COVID-19 crisis.
Since the start of this pandemic, Cebu Pacific has been working on accelerating its transformation towards becoming an even more digitalized airline, resulting in a significantly reduced unit cost, allowing the carrier to continue offering affordable air travel.
This capital raising exercise will provide the airline with the needed runway to withstand the financial challenges it faces as it slowly goes back to pre-COVID business levels and settles into the “new normal.”
Gokongwei declares Cebu Pacific as an important part of the conglomerate’s investment portfolio. “We strongly believe in the airline’s vital mission of providing fundamental and value-for-money air travel in and out our country, and its crucial role as a driver for economic growth,” he added.
This capital raising exercise represents strong support and commitment on the part of JG Summit Holdings, Inc. (JGSHI) to provide financial support to CEB.
JGSHI, parent and 67 percent owner of CEB, will invest its proportionate share of the $250 million convertible preferred share, which will be offered to existing shareholders for subscription. JGSHI further commits to take on any balance of unsubscribed shares in this general offering.