Cathay to buy back warrants from Hong Kong SAR Government

Cathay Pacific Airways has entered into an agreement to buy back all warrants it had issued to the Hong Kong SAR (HKSAR) Government. Under the agreement, Cathay will buy back the warrants for a total consideration of at least HK$1.5bn ($192.3 million). Cathay clarified that the exact amount is subject to share price movement between signing and completion of the agreement. Completion is expected to occur ten business days after the signing, after which the warrants will be cancelled. The company added: ""The buyback will eliminate the possibility of dilution of Cathay shares for our shareholders."" ""Cathay’s recapitalisation in 2020 was essential to ensuring we sustained our operations amid the industry downturn caused by the global pandemic, while continuing our commitments to Hong Kong as an international aviation hub,"" said Cathay CEO Ronald Lam. ""Our strong financial results for the first half of 2024 give us the confidence to buy back the warrants."" The warrants issued to the HKSAR Government, as part of Cathay's HK$39bn ($5bn) recapitalisation in 2020, comprised of three tranches: the issuance of HK$19.5bn ($2.5bn) preference shares with warrants to the HKSAR Government, a HK$11.7 billion ($1.5bn) rights issue of ordinary shares to existing shareholders, and a HK$7.8 billion ($1bn) bridge loan facility provided by the HKSAR Government, which was not utilised and expired on 8 June 2023. The buyback terms were agreed after arm's length negotiations, the company said and were considered to be ""fair and reasonable"" for both Cathay as well as its shareholders. Cathay intends to fund the buyback of the warrants from its existing sources of finance. It further clarified the buyback will not impact its commitment to its investment plans. ""As we close this chapter in our history, I would like to extend my sincere gratitude to the HKSAR Government and to all our shareholders for their invaluable support,"" continued Lam. Cathay repurchased all the remaining preference shares from the HKSAR Government in July. It has also paid a total of HK$2.44bn ($313 million) in preference share dividends to the government over its holding period.