Shareholders of Philippine Airlines’ (PAL) parent firm, PAL Holdings Inc., voted on Thursday to enlarge its capital base and issue more shares to provide financial support to the flag carrier through its Chapter 11 creditor protection plea.
Following the company’s stockholders’ meeting, PAL Holdings said shareholders of the company, controlled by billionaire Lucio Tan, approved the doubling of its capital base from P13.5 billion to P30 billion and the issuance of 10.2 billion shares.
PAL Holdings expects to raise P12.75 billion from the share offer, which will be issued to Tan’s Buona Sorte Holdings Inc. through a private sale.
Apart from the equity infusion, Tan’s Buona Sorte would separately extend a $250-million five-year term loan to PAL, the company previously said.
The combined $505-million debt and equity injection would be used by PAL as “working capital” and was a key feature of its US Chapter 11 filing on Sept. 3.
The petition, triggered by multiyear losses that were amplified by the arrival of the global health crisis last year, would allow PAL to eliminate $2.1 billion in aircraft-related debts, restructure its business and downsize its fleet to ensure sustainable operations upon emerging from the process.
During the meeting, Tan was also elected chair alongside directors Carmen K. Tan, Lucio C. Tan III, Sheila T. Pascual, Gilbert Gabriel F. Santa Maria, Junichiro Miyagawa and independent directors Johnip G. Cua, Bienvenido E. Laguesma and Jerome S. Tan.
Before filing its Chapter 11 plea, PAL had overall assets of $4.1 billion and $6.07 billion in liabilities with cash and its equivalents amounting to $31.9 million.
From January to September, PAL Holdings cut losses by 24 percent to P21.83 billion after slashing expenses.
Revenues during the period were down nearly 30 percent to P32.2 billion as passenger ticket sales fell 39 percent.
For the third quarter alone, the airline group saw revenues increase 67 percent to P14.12 billion as travel restrictions started to ease. Losses during the quarter narrowed by 34 percent to P5.28 billion.