Cebu Air Inc., which operates budget carrier Cebu
Pacific, yesterday said proceeds of a $250-million fundraising in this quarter will be used for debt repayments and aircraft operating lease payments due this year.
Cebu Pacific recently secured the Philippine Stock Exchange’s (PSE) approval to conduct convertible preferred shares stock rights offering of about $250 million as part of its business transformation exercise.
The airline said the fundraising proceeds will be used to strengthen its balance sheet by providing liquidity to address its financial liabilities.
These include $100 million for repayment of an advance by JG Summit Philippines Ltd., $71.3 million allocation for aircraft operating lease payments due in 2021, $72.3 million for principal debt repayments due in 2021, and $6.4 million allocation for general corporate purposes, which are primarily for passenger refunds in case cash inflows from operations become insufficient as a consequence of the coronavirus pandemic’s impact to health and travel related concerns.
The offering period starts February 26 up to March 4, 2021. This will be listed on March 19, 2021. The offer price is $0.74 to $0.84 apiece.
“The foregoing discussion represents a best estimate of the use of proceeds based on the corporation’s current plans and anticipated expenditures. The plans may change based on factors including changing market conditions or new information regarding the cost or feasibility of the plans,” Cebu Pacific said in a disclosure to the PSE.
In the first nine months of 2020, Cebu Pacific reported a P14.7-billion net loss, a reversal from the P6.8-billion net income posted in the same period in 2019, due to the pandemic’s impact.
Cebu Pacific’s revenues dropped 70 percent to P19.3 billion in the nine months, from P63.6 billion earned in the same period in 2019.
The overall decline in revenues was brought about by the impact of the coronavirus disease 2019 (COVID-19) outbreak that resulted in suspension of scheduled flights beginning March 19, 2020, due to the community quarantine.
In a related development, Cebu Pacific is offering insurance as an add-on to boost passenger confidence to travel.
COVID Protect, its newest add-on to CEB Travelsure, will cover COVID-related hospitalization and treatments. The carrier aims to provide more passenger options as it prioritizes health and safety. – Myla Iglesias