HK government to bail out Cathay Pacific with HK$30b in loan and direct stake
Cathay Pacific will undergo a HK$40b (US$5.2b) capital restructuring exercise as the Hong Kong government takes the lead in a bailout package worth nearly HK$30b in loans and an undisclosed stake, lending its full backing for the city to remain the region’s aviation hub. It is the first time the government has directly injected money into a private company. Hong Kong’s flag carrier will issue new shares as part of the plan which will see the authorities taking up two “observer” boardroom seats in an unprecedented shake-up that will empower it to have a direct say in how the airline is run, sources said. Emerging as a “white knight”, the government will offer a loan to be paid back in the future and, more controversially, it will take a stake in the airline without seeking full boardroom status. Instead, it will have the “two observers” on the board, industry sources revealed. Trading was suspended on Tuesday morning while the city’s leader, Carrie Lam Cheng Yuet-ngor, met with the Executive Council, her de facto cabinet, to get final approval of a package that is expected to be announced later on Tuesday. Cathay Pacific is now majority-owned by the Swire Group with a 45% stake, and Air China with 29.99%. The restructuring is well above the airline’s market capitalisation which stands at HK$34.6b. Sources said the government decided to offer the rescue package given the importance of maintaining Hong Kong’s status as a regional aviation hub, and taking into account the hard-earned aviation rights, and important routes and flights, Cathay enjoyed and provided to residents and international passengers alike.<br/>
https://portal.staralliance.com/cms/news/hot-topics/2020-06-09/oneworld/hk-government-to-bail-out-cathay-pacific-with-hk-30b-in-loan-and-direct-stake
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HK government to bail out Cathay Pacific with HK$30b in loan and direct stake
Cathay Pacific will undergo a HK$40b (US$5.2b) capital restructuring exercise as the Hong Kong government takes the lead in a bailout package worth nearly HK$30b in loans and an undisclosed stake, lending its full backing for the city to remain the region’s aviation hub. It is the first time the government has directly injected money into a private company. Hong Kong’s flag carrier will issue new shares as part of the plan which will see the authorities taking up two “observer” boardroom seats in an unprecedented shake-up that will empower it to have a direct say in how the airline is run, sources said. Emerging as a “white knight”, the government will offer a loan to be paid back in the future and, more controversially, it will take a stake in the airline without seeking full boardroom status. Instead, it will have the “two observers” on the board, industry sources revealed. Trading was suspended on Tuesday morning while the city’s leader, Carrie Lam Cheng Yuet-ngor, met with the Executive Council, her de facto cabinet, to get final approval of a package that is expected to be announced later on Tuesday. Cathay Pacific is now majority-owned by the Swire Group with a 45% stake, and Air China with 29.99%. The restructuring is well above the airline’s market capitalisation which stands at HK$34.6b. Sources said the government decided to offer the rescue package given the importance of maintaining Hong Kong’s status as a regional aviation hub, and taking into account the hard-earned aviation rights, and important routes and flights, Cathay enjoyed and provided to residents and international passengers alike.<br/>
