Stockholders approve Cebu Air’s stock rights offering

Cebu Air, Inc. has obtained approval from stockholders for its plan to issue convertible preferred shares and bonds, as the operator of Cebu Pacific seeks to raise $500 million (about P24.13 billion) to survive the coronavirus pandemic.

In a meeting with stockholders on Friday, the Gokongwei-led company said stockholders representing 87.36% of its total outstanding capital stock approved its previously disclosed fundraising plans.

Specifically, the stockholders gave the go-signal to increas the company’s authorized capital stock to P1.75 billion from P1.34 billion at present, from which it will create a new class of convertible preferred shares.

These shares will be offered for sale through a stock rights offering, which should generate about $250 million (about P12.07 billion) for the company. The underlying common shares of the convertible preferred shares will then be listed at the Philippine Stock Exchange (PSE).

The stockholders also greenlit the issuance of convertible bonds, warrants, bonds with detachable warrants and other similar securities, whose underlying common shares will likewise be listed on the PSE.

The measures are part of Cebu Pacific’s “Business Transformation Fundraising Plan,” which the company crafted to strengthen its balance sheet amid the crisis.

When the company first announced this plan in October, Cebu Air said it has been struggling to cope as passenger traffic plunged due to travel restrictions.

As of end-September, Cebu Pacific’s net loss has reached P14.69 billion, reversing last year’s profits of P6.77 billion. Revenues slumped 70% to P19.34 billion, as air passenger traffic dropped 72% to 4.7 million.

In a separate statement, Cebu Pacific said on Friday it is adding self-service features to its online booking portal to allow travelers to manage their information more easily.

“We have been enhancing our contactless experience and accelerating our digital initiatives because these provide quicker and safer options for our passengers. Our customers remain at the heart of our business, so you can expect more enhancements from us that further support and enable a self-service journey for everyone,” Candice Jennifer A. Iyog, Cebu Pacific vice-president for marketing and customer experience, said in the statement.

Shares in the company closed at P49.70 each on Friday, up 15 centavos or 0.30% from the last session. — Denise A. Valdez