Cebu Air Inc. (CEB), operator of budget carrier Cebu Pacific, yesterday approved the $250-million investment from International Finance Corp. (IFC), the IFC Emerging Asia Fund and Indigo Philippines LLC, an affiliate of Indigo Partners LLC, as part of its restructuring effort following the severe impact of the pandemic.
In a disclosure to the Philippine Stock Exchange (PSE), CEB said its board of directors approved during a special meeting held last April 16 the investment in a form of convertible bonds.
CEB added an agreement was signed on the same date to receive the $250 million investment in the form of convertible bonds.
“Transaction closing is subject to post-signing deliverables, which the parties expect to complete over the succeeding weeks.” CEB said.
The number of underlying shares for the convertible bonds is 318.8 million common shares priced at P38 each.
IFC is a sister organization of the World Bank and a member of the World Bank Group. It is the largest global development institution focused exclusively on the private sector in developing countries.
The IFC Emerging Asia Fund is a $693 million private equity fund managed by the IFC Asset Management Co.
United States-based private equity firm Indigo Partners LLC specializes in investing in the aviation sector. Its current airline investments include Frontier Airlines (US), Volaris (Mexico), Wizz Air (EU) and JetSMART (Chile).
Last year, CEB reported a net loss of P22.2 billion, a reversal from its net income of P9.1 billion in 2019, due to the severe impact of the coronavirus pandemic. The airline flew only 5 million passengers, down 78 percent compared to 2019.
Revenues was also down by 73 percent to P22.6 billion in 2020. CEB reported negative earnings before interest, tax, depreciation and amortization of P932 million.
Amid severe losses incurred in 2020, CEB has successfully completed two significant fundraising initiatives amounting to P28.5 billion this year.
CEB’s convertible preferred shares were listed on the PSE on March 29, providing it with P12.5 billion in fresh capital.
In addition, CEB signed a P16 billion, 10-year term loan facility with a syndicate of domestic banks, including the Development Bank of the Philippines, Land Bank of the Philippines, Asia United Bank Corp., Bank of the Philippine Islands, Metropolitan Bank & Trust Company, and Union Bank of the Philippines early this month.
Proceeds of these fundraising activities will be used to strengthen the airline’s balance sheet by providing liquidity to address its financial liabilities, and working capital for general corporate purposes.
