SEC approves Cebu Air’s capital increase

THE Securities and Exchange Commission (SEC) has approved the increase in authorized capital stock of Cebu Air, Inc., which the listed airline operator filed for to finance its business transformation plan as the industry faces challenges posed by the pandemic.

“It is currently implementing a business transformation exercise that involves right-sizing of network and fleet to meet new demand, and improvement of operations efficiency through process and policy enhancements and digitalization, among others,” Cebu Air said in a statement on Monday.

This increased the company’s authorized capital stock to P1.74 billion from P1.34 billion, which now consists of 1.34 billion common shares priced at P1 apiece and 400 million convertible preferred shares worth P1 per share.

Some 328.95 million convertible preferred shares with a par of P1 have been subscribed and paid for in cash through the company’s recent stock rights offering.

The total issue value amounted to P12.5 billion, with a par value worth P328.95 million and P12.17 billion in additional paid-in capital.

Cebu Air’s previous authorized capital stock was divided into 1.34 billion common shares at P1 apiece.

The airline operator said it aims to raise some $500 million for its business transformation program, which involves $250 million of aggregate proceeds from its convertible preferred shares rights issue.

The remaining half will be coming from the private placement of convertible bonds, warrants, bonds with detachable warrants, and other similar security instruments with a subscription price of nearly $250 million.

Final terms of the convertible preferred shares rights issue and the private placement will be decided upon by the company’s board of directors.

“The proceeds from this business transformation fund-raising plan shall be used to strengthen the balance sheet of the corporation and for general corporate purposes,” Cebu Air said.

The issue price of offerings will be determined according to several factors. However, Cebu Air said the final offer price is expected to be within P38 to P48.

“The proposed convertible preferred shares rights issue and private placement would be fair, transparent and equitable to all shareholders. All relevant approvals will be sought from, and appropriate disclosures would be made to, the [SEC] and the Philippine Stock Exchange,” the listed airline operator said.

On Monday, Cebu Air shares at the stock exchange went down by 4.39% or P2.05 to P44.70 apiece. — Keren Concepcion G. Valmonte