PAL Holdings to Issue 17 Billion Shares to Help Philippine Airlines Refleet
06/27/2012| 01:53am US/Eastern
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By Cris Larano
MANILA--PAL Holdings Inc. (PAL.PH), the controlling shareholder of Philippine Airlines Inc., said Wednesday its board has approved a plan to boost its capital stock to enable it to issue 17 billion shares to help fund the flag carrier's refleeting program.
PAL Holdings told the stock exchange that its capital stock will rise to 23 billion shares from 20 billion shares, which would enable its controlling shareholder Trustmark Holdings Corp. to execute its proposal to inject 17 billion pesos ($399 million) into Philippine Airlines to help the carrier buy new planes.
Trustmark will subscribe to 17 billion PAL Holdings shares at a par value of PHP1 each. PAL Holdings will issue most of the 3 billion new shares and all its existing capital stock to Trustmark--of the existing 20 billion shares, only 5.4 billion have been issued, with 97.7% owned by Trustmark.
After the capital injection, PAL Holdings will invest PHP17 billion into Philippine Airlines by acquiring 85 billion new shares in the carrier at a par value of PHP0.20 each.
PAL Holdings already holds 84.6% of Philippine Airlines.
Philippine conglomerate San Miguel Corp. (SMC.PH) recently bought nearly half of Trustmark from billionaire Lucio Tan to get a stake in Philippine Airlines as part of its plan to diversify operations.
The carrier, which has posted losses for the last few quarters after posting a $72.5 million profit in the fiscal year ended March 2011, requires fresh capital to fund a refleeting program that would enable it to stay competitive and return to profitability.
San Miguel said it expects Philippine Airlines to become profitable in two years.
Write to Cris Larano at cris.larano@dowjones.com
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