Cathay Pacific has unveiled a HK$6.7bn (US$869m) bond issuance. Shares fell 9.71% at the close, as within the statement Cathay confirmed that new quarantine measures planned for passenger and cargo crew arriving in Hong Kong would damage its revenue prospects. Cathay is burning through cash at a rate of HK$1-1.5 billion a month but this will increase dramatically by HK$300-400m a month following the stricter quarantine controls for aircrew now in place the statement confirmed.
Cathay Pacific has launched a HK$6.74bn (US$870million) convertible bond offering of 2.75% guaranteed convertible bonds due 2026 at an initial conversion price of HK$8.57 per conversion share, which represents a premium of 30.0% over the last closing price of HK$6.59 per share as quoted on the Hong Kong Stock Exchange on 27 January 2021 and a premium of approximately 25.84% over the average five-day closing price of HK$6.81.
Assuming full conversion of the bonds at the initial conversion price of HK$8.57 per share, the bonds will be convertible into 786,464,410 conversion shares, representing approximately 12.22% of the total issued share capital of the company and approximately 10.89% of the enlarged total issued share capital resulting from the full conversion of the Bonds. The conversion shares will be fully paid and will in all respects rank pari passu with the shares then in issue on the relevant registration date.
Cathay intends to use the proceeds from the subscription for general corporate purposes. The airline’s board of directors comments that it considers this issuance as “an opportunity to further strengthen the company’s liquidity and working capital position and which allows the company to better navigate the challenges posed by the COVID-19 pandemic”.
BNP Paribas, HSBC and Morgan Stanley are the bookrunners.