With its role as a significant driver of economic growth combined with its mission to provide value-for-money air travel, Cebu Pacific remains an integral part of JG Summit Holdings, Inc.’s investment portfolio, even in light of recent challenges relating to the coronavirus pandemic.
To strengthen the airline’s balance sheet and ensure that it is well-positioned to recover from the impact of Covid-19, Cebu Air, Inc. (CEB) is seeking to raise up to $500 million in additional capital. This is part of its multi-pronged approach to working with capital providers, creditors, suppliers, and all other stakeholders, especially its employees.
“We need to create a longer runway for CEB so that we can continue providing affordable and accessible air transport services for everyJuan,” said Lance Y. Gokongwei, President and CEO of JGSHI and Cebu Pacific.
CEB recently notified the Philippine Stock Exchange that it will seek approval for the issuance of up to $250 million in new convertible preferred shares, as well as another $250 million in privately placed convertible bonds. It is expected that the approvals for the issuance of the preferred shares and the convertible bonds will be taken up at a special shareholders meeting scheduled for November 20, 2020.
The new convertible preferred shares will be made available to all stockholders, including JGSHI, giving all investors the opportunity to participate. The privately placed convertible bonds, on the other hand, will be made available to a limited number of reputable international investors.
This capital-raising exercise reflects the strong commitment on the part of JG Summit to provide financial support to CEB. JGSHI, the parent conglomerate and 67% owner of CEB, will invest its proportionate share of the $250 million convertible preferred share, which will be offered to existing shareholders for subscription. JGSHI further commits to take on any balance of unsubscribed shares in this general offering.
Since the start of this pandemic, CEB has accelerated its transformation toward becoming an even more digitalized airline, resulting in a significantly reduced unit cost, allowing the carrier to continue offering affordable air travel in the new normal.
CEB ended 2019 with a strong balance sheet. Its net debt to equity ratio end of 1H 2020 is only 1.9x, still very low in the industry, thus allowing the carrier to raise more capital.
For more information on Cebu Pacific, visit cebupacificaircorporate.com
