Cathay Pacific plans to settle Hong Kong government above 3 to 5 years
10 June, 2020
Cathay Pacific Airways said it expects to settle the Hong Kong federal government for HK$19.5 billion (US$2.5 billion) of preference shares over a three- to five-year period.
The shares are part of a US$5 billion recapitalisation package announced on Tuesday to greatly help the airline weather the coronavirus crisis, that your International Air Transport Association estimates will definitely cost the industry an archive US$84 billion in 2020.
The notes carry a coupon fee of 3 % for the first three years, rising to 5 % in year four, 7 % in year five and 9 % in year six, giving the airline a motivation to redeem them.
"We would certainly be looking to repay that over a 3-5 calendar year period," chief financial officer Martin Murray explained within an analyst briefing submitted to the airline's website late Tuesday.
Murray said the package, which also includes a good HK$11.7 billion rights issue to current shareholders including Swire Pacific, Air China and Qatar Airways, would a lot more than halve the airline's gearing levels.
"That subsequently restores access to both equity and debt industry and we can tap that market after in the entire year or next year for equity and debt," he said.
The Hong Kong government could gain a 6 % stake in Cathay via HK$1.95 billion of warrants convertible to shares. Financing Secretary Paul Chan explained on Tuesday it was certainly not the goverment's intention to remain a long-term shareholder in Cathay.
Swire, which owns 45 % of Cathay, has decided to remain a controlling shareholder for provided that the government owns preference shares or any amount of a good HK$7.8 billion bridging loan remains outstanding.
Daiwa analyst Kelvin Lau told consumers he expected the airline's share selling price to come under great pressure as a result of the potential 43 % dilution from the recapitalisation offer.
Source: www.channelnewsasia.com
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