Cathay to buy back warrants from gov't for $1.5b

The group expects to repurchase the warrants for at least HK$1.5b. 

Cathay Pacific Airways Limited (Cathay) announced that it has agreed to buy back all of the warrants it had issued to the Hong Kong government for a total consideration of at least HK$1.5b.

The buyback will eliminate the possibility of diluting Cathay shares for their shareholders.

Cathay intends to fund the buyback of the warrants from its existing sources of finance, which will not impact the commitment to its investment plans.

The warrants were issued to the HKSAR Government as part of Cathay’s HK$39 billion recapitalisation in 2020, which comprised three tranches:

• The issuance of HK$19.5b preference shares with warrants to the government.
• An HK$11.7b rights issue of ordinary shares to existing shareholders.
• A HK$7.8b bridge loan facility provided by the HKSAR Government, which was not utilised and expired on 8 June 2023.

“Our strong financial results for the first half of 2024 give us the confidence to buy back the warrants,” said Ronald Lam, CEO of Cathay. 

Just last month, Cathay bought back all the remaining preference shares from the government. 

It has also paid a total of $2.44b in preference share dividends to the government over its holding period.