Cathay Pacific floats $39b bailout plan

Most will come from its preference shares and warrants issue.

Cathay Pacific has proposed to implement a recapitalisation plan to raise aggregate proceeds of around $39b, which involves preference shares and warrants issue, a rights issue and a bridge loan, an HKEX filing revealed.

Cathay Pacific’s CFO Martin Murray stated in an analyst briefing that they aim to repay the Hong Kong government in a three- to five-year period.

The aggregate subscription price of the preference shares is at $19.5b, whilst the warrants to subscribe for shares has an aggregate exercise price of about $1.95b. The rights issue will release 2.5 billion shares on the basis of seven rights shares for every 11 existing shares held on the record date. It has a rights subscription price of $4.68 apiece, accumulating $11.7b in proceeds.

Lastly, the bridge loan facility is to be extended by Aviation 2020 to Cathay Pacific amounting to $7.8b.

“The recapitalisation proposal is proposed in response to a series of unexpected events outside the Cathay Pacific Group’s control, including the outbreak of the global COVID-19 pandemic which has created significant challenges for the airline industry,” the airlines said in the filing.

In the first four months of 2020, the number of passengers carried by the Cathay Pacific Group dropped by 64.4% against a 49.9% crash in capacity and a 59.1% fall YoY in revenue passenger kilometres.