Cebu Pacific Air eyes $500mn capital raising measures

Cebu Pacific Air (5J, Manila Ninoy Aquino Int’l) will seek to raise USD500 million in additional capital to bolster its balance sheet amid the covid-19 crisis, it outlined in a Philippine Stock Exchange filing on October 8. It will seek approval at a special shareholders’ meeting on November 20 for the issuance of USD250 million in new convertible preferred shares and a further USD250 million by offering convertible bonds. “The proceeds from this Business Transformation Fundraising Plan shall be used to strengthen the balance sheet of the corporation and for general corporate purposes,” the filing said, adding that it would allow the company “to navigate the current environment and thrive in the new normal.” The shares will be made available to all stockholders, including Manila-based parent JG Summit Holdings, while the bonds will be offered to “a limited number of reputable international investors,” the airline said in an October 8 press release. “We need to create a longer runway for CEB so that we can continue providing affordable and accessible air transport services for everyone,” Lance Gokongwei, president and chief executive of Cebu Pacific Air and JG Summit Holdings, said in the release. Revenues at Cebu Pacific Air in the first six months of 2020 fell to PHP17.3 billion pesos (USD358 million), down from PHP44.7 billion (USD924 million) for the first half of last year. It cancelled 44,000 flights during the period and is currently running at 15% of pre-pandemic capacity. It has laid off around 1,000 employees so far this year, almost a third of its workforce, according to CNN Philippines. As previously reported, it hopes that with a new strategy approved in June, it will be able to “right-size” its network and fleet.