Cathay Pacific to get bailout led by Hong Kong Government
Hong Kong’s government is leading a bailout of the city’s flagship carrier Cathay Pacific, providing it with the bulk of a $5b funding package that could also give the government a minority stake in the 73-year-old company. Cathay said Tuesday that it would receive $2.5b from a government-owned entity called Aviation 2020 Ltd., which will buy preference shares in the company. The carrier will also be able to draw from a $1b bridge-loan facility from the same entity at a low interest rate. Cathay will separately raise $1.5b by selling new shares, and its biggest shareholders, Swire Pacific, Air China and Qatar Airways, have committed to subscribe to the rights issue. Augustus Tang, Cathay’s CE, said the company turned to the government for assistance after the coronavirus pandemic hammered its business and caused its passenger numbers to drop by more than 99% from a year ago. Chairman Patrick Healy said the carrier was facing the prospect of collapse and that the deal is critical to Cathay’s survival. The government could end up owning 6.08% of Cathay’s common shares following the recapitalization, if Aviation 2020 also exercises warrants for about $250m in additional shares.<br/>
https://portal.staralliance.com/cms/news/hot-topics/2020-06-10/oneworld/cathay-pacific-to-get-bailout-led-by-hong-kong-government
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Cathay Pacific to get bailout led by Hong Kong Government
Hong Kong’s government is leading a bailout of the city’s flagship carrier Cathay Pacific, providing it with the bulk of a $5b funding package that could also give the government a minority stake in the 73-year-old company. Cathay said Tuesday that it would receive $2.5b from a government-owned entity called Aviation 2020 Ltd., which will buy preference shares in the company. The carrier will also be able to draw from a $1b bridge-loan facility from the same entity at a low interest rate. Cathay will separately raise $1.5b by selling new shares, and its biggest shareholders, Swire Pacific, Air China and Qatar Airways, have committed to subscribe to the rights issue. Augustus Tang, Cathay’s CE, said the company turned to the government for assistance after the coronavirus pandemic hammered its business and caused its passenger numbers to drop by more than 99% from a year ago. Chairman Patrick Healy said the carrier was facing the prospect of collapse and that the deal is critical to Cathay’s survival. The government could end up owning 6.08% of Cathay’s common shares following the recapitalization, if Aviation 2020 also exercises warrants for about $250m in additional shares.<br/>
