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Tan’s Buona Sorte infusing P12.5 billion into PAL

Richmond Mercurio – The Philippine Star

October 16, 2021 | 12:00am

MANILA, Philippines — Lucio Tan’s Buona Sorte Holdings Inc. (BSHI) is inject­ing P12.5 billion in fresh capi­tal to PAL Holdings Inc., the parent company of Philippine Airlines, as part of efforts to aid the flag carrier.

In a stock exchange filing, PAL Holdings said details to support the company’s previously proposed capital increase to P30 billion from P13.5 billion have been final­ized.

PAL Holdings said the hike in the company’s authorized capital stock would be sup­ported by a private placement of BSHI worth $255 million, or about P12.75 billion.

The amount will be received by PAL Holdings in cash by way of fresh and additional capital.

PAL Holdings said the P12.75 billion private place­ment represents the full and final payment of BSHI’s subscription to 10.2 billion new common shares at a subscrip­tion price of P1.25 apiece.

It earlier said the increase of authorized capital is meant to accommodate the fresh infusion of capital into the company by an affiliate firm of the Lucio Tan Group.

The new capital will in turn be invested into its subsid­iary, Philippine Airlines Inc. (PAL), pursuant to the court-supervised reorganization of the flag carrier.

PAL Holdings is the parent firm of flag carrier PAL.

The publicly listed company is not included in the Chapter 11 filing of PAL, which it filed in the Southern District of New York on Sept. 3.

The restructuring plan includes infusion of $505 million in long-term equi­ty and debt financing from PAL’s majority shareholder, alongside $150 million of ad­ditional debt financing from new investors.

PAL received last Sept. 30 US court approval on a final basis to access its $505 million debtor-in-possession (DIP) financing, which the airline said is “a core feature” of its restructuring plan.

The DIP financing is com­posed of a $250 million first lien secured Tranche A multi-draw term loan, of which $20 million was drawn following approvals on the “first day” court hearing last Sept. 9.

It also includes second lien secured Tranche B multi-draw term loan facility of $255 mil­lion.

The approval to fully access  its DIP financing gives PAL the additional liquidity needed to meet its current and future obligations and to continue operating as usual.

Meanwhile, PAL Holdings announced the nomination of

Tan’s daughter, Sheila Pas­cual, as a member of the com­pany’s board for 2021-2022.

Pascual is expected to re­place the seat of Tan’s son-in-law Joseph Chua in PAL Holdings’ board.

The Tan Group in an Oct. 6 public advisory said Chua no longer has authority to “rep­resent any of the Tan com­panies and the Tan family” and that “any prior authority of representation given to Chua are deemed void and or revoked.”

PAL Holdings is scheduled to hold its annual stockhold­er’s meeting on Nov. 25 where a new set of directors will be elected.

Also nominated to PAL Holdings board for 2021- 2022 are Tan and his wife, Carmen, grandson Lucio Tan III, PAL president and chief operating officer Gilbert Santa Maria, and Junichiro Miyagawa, who was elected as director last April to serve as a representative of Japan’s ANA in the board following the retirement of Ryuhei Maeda.

Johnip Cua, Jerome Su Tan, and Bienvenido Laguesma were nominated as indepen­dent directors.

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