Cebu Air, Inc., the listed operator of budget carrier Cebu Pacific, is including the issuance of warrants as an alternative under its $500-million (about P24.28 billion) fundraising plan to cope with the coronavirus pandemic.
In a stock exchange disclosure on Friday, the company said its board of directors has approved issuance of warrants or bonds with detachable warrants, or other similar security instruments, as alternative to convertible bonds.
To recall, Cebu Pacific announced a plan earlier this month to raise $500 million in funds through the issuance of convertible preferred shares and the private placement of convertible bonds.
“As an alternative to the convertible bonds, if the board of directors decides to issue warrants/bonds plus warrants, the board of directors will determine the final terms and conditions, but the strike price shall be within P38 to P45 range,” it said.
This range represents 2% to 21% conversion premium over the company’s 30-day volume weighted average price from Aug. 26 to Oct. 7, it said.
In line with this, Cebu Pacific will be seeking the approval of shareholders and complying with regulatory requirements to fulfill the fundraising plan.
As previously disclosed, the company is embarking on a “Business Transformation Fundraising Plan,” which involves increasing its authorized capital stock to P1.74 billion from P1.34 billion and creating a new class of convertible preferred shares.
“The proceeds from this Business Transformation Fundraising Plan shall be used to strengthen the balance sheet of the corporation and for general corporate purposes,” it said.
Cebu Pacific said the coronavirus pandemic, which came with travel restrictions in different countries, has severely damaged air passenger traffic and continues to cloud the outlook for the airline industry.
The company swung to a P9.14 billion attributable net loss in the first half of 2020, reversing its P7.14 billion profit a year ago. Gross revenues dropped 61% to P17.33 billion, as around 44,000 of its flights were cancelled from mid-March to end-June.
Shares in Cebu Pacific picked up 45 centavos or 1.11% on Friday’s trading, closing at P41.15 apiece. — Denise A. Valdez