Cebu Air Inc. on Thursday said it has set the price range for its $250-million stock rights offering, which it will conduct early next month.
The company that operates budget carrier Cebu Pacific said it will offer convertible preferred shares which will be priced between P38 to P45 per entitlement right. The said price was a discount from Thursday’s closing price of P50.40 per share.
The said price was based on the company’s 30-day volume weighted average price from August 26 to October 7.
The company has redominated its offer from US dollars to Philippine peso to allow wider participation by all potential eligible shareholders, particularly retail shareholders.
The offer will now be up to P12.5 billion in convertible preferred shares, the company said.
“Adjustments to the indicative timetable of the offer have also been made to accommodate the completion of the necessary regulatory requirements to implement the redenomination,” it said.
A stock rights offer is a measure that allows a shareholder to buy the preferred shares depending on the amount of shares that he holds.
Proceeds of the offer will be used to transform its business felled by the Covid-19 pandemic.
Some P4.8 billion will be allocated for the repayment of an advance by JG Summit Philippines Ltd., P3.91 billion for aircraft operating lease payments due in 2021, P3.32 billion for principal debt repayments due in 2021 and P384 million will be for general corporate purposes, which are primarily for passenger refunds in case cash inflows from operations become insufficient as a consequence of the Covid-19 pandemic’s impact on health and travel related concerns.
The offer period is scheduled on March 3 through March 9 and will be listed at the Philippine Stock Exchange on March 29.
“The airline industry faces significant challenges as a result of unprecedented events outside the control of the corporation brought by the Covid-19 pandemic. Travel restrictions imposed by various governments, both local and abroad, have led to abrupt reduction in passenger traffic for the corporation and casts uncertainty over the near term prospects of the corporation despite its market leadership,” the company said earlier.
“Due to this exceptional change in market conditions and industry dynamics, the corporation saw the urgent need to fast-track its transformation.”
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