Cebu Pacific closed three major fundraising transactions totaling P40.5 billion (US$845 million) this year to address COVID-19-induced disruptions to its operations
These fundraising transactions are a P16-billion term loan facility, a P12.5-billion convertible preferred shares rights issuance, and a P12-billion convertible bonds issue subscribed by private investors
The fundraising exercise—named the Business Transformation Fundraising Plan—is part of a broader crisis response started in early 2020, including a plan to transform operations and reposition the business for the new normal
Cebu Pacific said it will evaluate further measures as it deems necessary to remain competitive in the current difficult operating environment
Cebu Pacific closed three major fundraising transactions totaling P40.5 billion (US$845 million) this year to address the COVID-19-induced disruptions to its operations and prepare for its recovery.
These fundraising transactions are a P16-billion ($335 million) term loan facility provided by a group of government financial institutions and private sector commercial banks; a P12.5-billion ($260 million) convertible preferred shares rights issuance backed by key shareholder, CPAir Holdings, Inc.; and a P12-billion ($250 million) convertible bonds issue subscribed by the International Finance Corp. (IFC), IFC Emerging Asia Fund, and Indigo Philippines LLC.
Cebu Pacific last March 5 signed a 10-year term loan facility amounting to P16 billion with a syndicate of domestic banks.
Also last March, the airline’s convertible preferred shares were successfully listed on the Philippine Stock Exchange, providing Cebu Pacific with P12.5 billion in fresh capital.
On April 16, Cebu Pacific signed the agreement for the $250 million convertible bonds.
In a statement, the low-cost carrier said this series of fundraising exercises—named the Business Transformation Fundraising Plan—is part of a broader proactive and comprehensive crisis response started in early 2020, including an operational transformation plan to reposition the business for the new normal. Cebu Pacific said these initiatives were strongly supported by its lenders, lessors, and shareholders.
Cebu Pacific last year announced its fundraising plans which aim to enable the airline to “navigate the current environment and thrive in the new normal.”
The carrier earlier said it “saw the urgent need to fast track its transformation” due to the “exceptional change in market conditions and industry dynamics” brought on by the COVID-19 pandemic.
It noted that travel restrictions imposed by various governments, both local and abroad, have sharply reduced passenger traffic and cast “uncertainty over the near term prospects of the corporation despite its market leadership.”
In 2020, the airline reported a staggering P22.2 billion net loss as the COVID-19 pandemic and travel restrictions wreaked havoc on the aviation industry. For the first quarter of 2021, it posted a net loss of P7.298 billion, which is 516.9% higher than the P1.183 billion net loss sustained for the same period last year, amid ongoing flight restrictions and weak demand for travel.
Cebu Pacific said currently, flights are “still far behind [their] normal activity level due to ongoing flight restrictions and weak demand for travel.”
“The airline will evaluate appropriate further measures as it deems necessary to remain competitive given this most difficult operating environment,” Cebu Pacific said.
As of March 31, 2021, the group operates a fleet of 74 aircraft on a route network serving 55 domestic routes and nine international routes, with a total of 578 scheduled weekly flights. Cebu Pacific gradually recommenced operations on June 3, 2020 when quarantine restrictions were eased. It said it will continue to expand its operations as more local and foreign governments welcome flights into their cities.