Hong Kong gov’t set to take Cathay Pacific stake

The Government of Hong Kong is set to take a 6% stake in Cathay Pacific (CX, Hong Kong Int’l) as part of the locally-based carrier’s roughly HKD39.0 billion Hong Kong dollar (USD5.03 billion) recapitalisation plan. In a stock market filing, Cathay Pacific said the state, through its Aviation 2020 Limited vehicle, would be offered 416,666,666 preferential shares, i.e. those with restricted voting rights, valued at HKD19.5 billion (USD2.52 billion) and also has warrants for a further HKD1.95 billion (USD252 million) worth of ordinary shares. If both offerings are fully exercised, Aviation 2020 Ltd will gain a 6.08% stake in the airline and will also hold 195,000,000 Preference Shares immediately after the completion of the recapitalisation proposal. As an additional support measure, Aviation 2020 Limited will also extend a HKD7.8 billion (USD1.01 billion) committed bridge loan facility to Cathay Pacific.