Cathay Pacific raises US$870mil in convertible bonds to shore up liquidity, shares fall

- Reuters pic

HONG KONG's Cathay Pacific Airways Ltd said on Thursday it would issue HK$6.74 billion ($869.51 million) of convertible bonds to shore up liquidity, sending shares down as much as 9.4% in the worst daily decline in 12 years.

The five-year bonds will be dilutive to existing investors, representing 10.89% of the company's enlarged capital once they are converted into shares.

The bonds have an initial conversion price of HK$8.57 a share, a 30% premium to its last closing price before the issue was announced, and will carry a coupon rate of 2.75%, the airline said in an announcement to Hong Kong's stock exchange.

Cathay on Monday warned passenger capacity could be cut by about 60%, cargo capacity would fall by 25% and its monthly cash burn would rise if Hong Kong enacts new COVID-19 measures that would require flight crew to quarantine for two weeks upon their return home.

The airline said the expected move would increase monthly cash burn by around HK$300 million to HK$400 million, on top of the current HK$1 billion to HK$1.5 billion.

Cargo carrier FedEx Corp is planning a temporary relocation of its 180 Hong Kong-based pilots and their families to San Francisco as soon as Feb. 1 as a result of the expected quarantine measures, the South China Morning Post reported on Thursday, citing a memo to staff.

FedEx did not respond immediately to a request for comment.

To help bolster its balance sheet while international borders remain closed, Cathay last June received a $5 billion rescue package led by the Hong Kong government.

Assuming full conversion of the bonds and the Hong Kong government's exercise of warrants, top shareholder Swire Pacific Ltd's stake in Cathay will be diluted to 37.9% from 45% and Air China Ltd's stake will fall to 25.3% from 30%. - Reuters

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Cathay Pacific , FedEx , Swire Pacific


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