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Lucio Tan throwing $505 million lifeline to PAL as part of airline's reorganization

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ABS-CBN News

<div class="embed-wrap"><figure data-feedback="fb:likes,fb:comments"><img alt="Philippine Airlines Airbus A330-300 wide body jet. ABS-CBN News file photo" src="http://sa.kapamilya.com/absnews/abscbnnews/media/2021/business/10/27/20140519-pal-airplanes-jc-5.jpg?ext=.jpg"/><figcaption>Philippine Airlines Airbus A330-300 wide body jet. <em>ABS-CBN News file photo</em></figcaption></figure></div><p>MANILA - Tycoon Lucio Tan’s Buona Sorte Holdings Inc (BSHI) will infuse $255 million, or around P12.75 billion, in fresh capital into Philippine Airlines as part of the ailing carrier’s restructuring, PAL Holdings disclosed on Wednesday.</p><p>BSHI will also extend a $250 million 5-year term loan to PAL, to complete the $505 million working capital requirement of PAL under its proposed reorganization in connection with its Chapter 11 bankruptcy filing, the company added. </p><p>PAL Holdings, the parent firm of the airline, said BSHI’s capital infusion will be in exchange for P10.2 billion common shares at a subscription price of P1.25 per share. </p><ul class="op-related-articles">	<li><a href="https://news.abs-cbn.com/business/09/22/21/pal-files-petition-for-chapter-11-recognition-in-pasay">PAL asks Pasay Court to recognize US Chapter 11 bankruptcy protection filing</a></li></ul><p>Upon issuance of new shares, BSHI is expected to own 46.77 percent of PAL Holdings. Added to two other Tan-led firms Cosmic Holdings Corporation and Trustmark, the Lucio Tan Group, will own 89.45 percent of PAL Holdings.</p><p>The proposal will be presented for shareholder approval, the company said.</p><p>“Also to be submitted for consideration of the minority shareholders at said meeting is the proposal to waive the requirement of the Exchange to conduct a rights or public offering in respect of the BSHI Shares,” the company said. </p><p>PAL Holdings said it will “downstream” the $255 million fresh capital from BSHI to its subsidiary, Philippine Airlines Inc (PAI). </p><p>The company said it expects to exit from bankruptcy proceedings “upon completion of the debt-to-equity conversion at the PAI level” which is expected to be filed later this year. </p><p>“Creditors may thereafter, at its discretion, swap its new PAI shares for shares of Issuer (the “Swap”),” PAL Holdings said.</p><p>The Swap is expected to take place within the first quarter of 2022, subject to regulatory requirements. </p><p>Once the Swap is completed, foreign ownership in PAL Holdings may increase as creditors become shareholders, the company said.</p><p>&quot;Since the exchange ratio for the Swap has not yet been determined with finality, the exact level of foreign ownership cannot as yet be ascertained.&quot;</p><p>PAL Holdings said its proposed capital increase will be submitted at the Annual Stockholders’ Meeting on Nov. 25 “where independent shareholders may freely vote for or against the proposal.”</p><p>The aviation industry was one of the most badly affected sectors by the COVID-19 pandemic, with quarantine restrictions leading to a sharp decline in air travel.</p><ul class="op-related-articles">	<li><a href="https://news.abs-cbn.com/business/09/04/21/pal-announces-restructuring-amid-pandemic-impact">PAL announces restructuring amid pandemic impact, says flights to continue</a></li>	<li><a href="https://news.abs-cbn.com/business/09/06/21/pal-says-business-as-usual-after-chapter-11">&#x27;Business as usual&#x27;: PAL says Chapter 11 bankruptcy filing won&#x27;t affect flights, workers</a></li></ul><div><strong>RELATED VIDEO</strong></div><figure class="op-interactive"><iframe allow="autoplay; fullscreen" frameBorder="0" height="100%" id="ivsplayer01" scrolling="no" src="https://player.ivideosmart.com/ivsplayer/v4/dist/html/iframe-src.html?iframeid=ivsplayer01&amp;key=e8c22c015ca9eafa76f1e3edfa03c603&amp;spid=3001339&amp;vid=1766805" width="100%"></iframe></figure><div class="iwantbar">Watch more in <a href="//www.iwantv.com.ph/">iWantv</a> or <a href="//tfc.tv/">TFC.tv</a></div>

Tycoon Lucio Tan’s Buona Sorte Holdings will infuse $255 million in fresh capital into PAL, and extend the ailing airline a $250 million loan.