HONG KONG's
Cathay Pacific Airways' shareholders
approved a plan to raise HK$39
billion (US$5 billion) in a
government-backed rescue that includes the sale of preference shares and a
rights issue, reports Bloomberg.
When the recapitalisation plan
was announced last month, Cathay chairman Patrick Healy said it was the only
way to save the airline from collapse. Cathay's main shareholders Swire
Pacific, Air China and Qatar Airways said then they would vote in favour of the
plan.
Cathay will sell HK$19.5 billion of
preference shares with HK$1.95 billion of warrants to the Hong Kong government,
which will own 6.08 per cent of the carrier through a connected entity called
Aviation 2020 and have two observers on its board. Aviation 2020 is extending a
HK$7.8 billion bridge loan. Cathay plans to raise about HK$11.7 billion through
the rights issue.
As the controlling shareholder
with a 45 per cent stake, Swire abstained from voting in favour of the
resolution relating to the rights issue, in accordance with listing rules,
Cathay said in its statement.
The airline has been losing more
than HK$2 billion a month since February as the coronavirus outbreak wiped out
passenger demand globally and grounded fleets, hitting Cathay particularly hard
because it has no domestic market to fall back on in Hong Kong.
Cathay already was in plenty of
financial difficulty as social unrest in Hong Kong triggered a steep drop in
traffic, prompting it to issue profit warnings in the second half of 2019,
before Covis-19 erupted and further decimated travel.
Source : HKSG.
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