PAL Board Approves Capital Hike

 3 November 2021

The board of Directors of Philippine Airlines, Inc. (PAL) has officially approved the plan to infuse additional capital to the flag carrier at the PAL stockholders’ meeting held last week. 

The plan will be presented to the airline stockholders for approval on November 25, 2021.

The increase capital outlay raises Lucio Tan Group stake in the company to almost 90 percent. 

The airline also appointed new set of directors to oversee the company amid ongoing bankruptcy proceedings in US courts.

PAL board of directors for the year ahead will be composed of Lucio Tan as chair and CEO; Carmen Tan, Rowena Tan Chua, Lucio Tan III, Florentino Herrera III, Mark Chen and Junichiro Miyagawa as directors; Leonardo Alejandrino, Johnip Cua, Juan de Zuñiga Jr. and Samuel Uy as independent directors; and Gilbert Santa Maria as director, company president and COO.

PAL board also approved the appointment of SGV & Co. as the airline’s external auditor for 2021-2022.

The board also approved an amendment to its articles of incorporation reducing the par value of its authorized capital stock from P1 to P0.001, effectively diluting the shares of its existing shareholders, and restoring the par value to P1 to accommodate the capital infusion from Tan which had been announced earlier.

The airline earlier announced that it will receive investments from Buona Sorte Holdings Inc. (BSHI) which, alongside other entities controlled by the Lucio Tan group, will increase their combined stake to 89.49 percent from 80 percent after a P12.75-billion ($255 million) cash injection.

PAL Holdings disclosed the airline will issue 10.2 billion new shares to Buona Sorte—a transaction that requires the go-signal from the Securities and Exchange Commission and shareholders. 

PAL Holdings’ shareholder ANA Holdings of Japan will not participate in the capital call, and will thus see its 9.5 percent stake cut by half to 4.75%.

Buona Sorte Holdings will separately extend a $250- million five-year term loan to Philippine Airlines Inc., which is 99 percent owned by PAL Holdings.

The combined $505 million debt and equity injection would be used by PAL Inc. as “working capital” as it exits Chapter 11 bankruptcy protection filed in the United States before the end of the year.