CEBU Air Inc. (CEB), operator of Cebu Pacific, has increased its ownership stake in 1Aviation Groundhandling Services Corp. (1AV) to 60 percent through debt-to-equity conversion.
In a disclosure to the Philippine Stock Exchange, CEB said it entered into an agreement with 1AV, one of the leading providers of ground handling services in the Philippines, to facilitate a debt-to-equity conversion that will increase the airline’s ownership stake in 1AV from 40 percent to 60 percent.
CEB has signed a deed of assignment of credit and subscription with 1AV for the assignment of credit and subscription to 1.13 million shares, each with a par value of P100 per share, amounting to a total of P113 million.
The debt-to-equity conversion arises from certain loans and advances extended by the stockholders to 1AV for P150 million, the company said.
All parties agreed to convert the same into equity, with CEB’s debt portion at P113 million, it added.
“The debt-to-equity conversion will reduce 1AV’s debt and improve its financial health. At the same time, CEB will increase its equity ownership in 1AV, strengthening its management influence to enable it to more effectively integrate 1AV’s services with its operations, to reduce its operational costs while improving its service quality,” CEB said.
Meanwhile, 1AV’s other shareholders, Philippine Airport Ground Support Solutions Inc. (PAGSS) and Jefferson G. Cheng (JGC), both agreed to convert their outstanding loans in 1AV, amounting to P2.78 million and P34.2 million, respectively, or a total of P37 million, into equity through the issuance of 370,000 common shares.
As a result, PAGSS and JGC will collectively hold 40 percent ownership interest in 1AV.
Founded in 2018, 1AV operates in 34 airports across the Philippines with 6,224 employees, and continues to expand its operations supporting the country’s largest airline and other international carriers.