Cathay Pacific Proposes Recapitalization to Raise $5 Billion

(Bloomberg) — Cathay Pacific Airways Ltd. announced a HK$39 billion ($5 billion) recapitalization plan that includes preference shares and a rights issue as it battles through unprecedented difficulty brought on by the coronavirus pandemic and protests in Hong Kong.

The rights issue proposal is on the basis of seven rights shares for every 11 existing shares held and would raise about HK$11.7 billion, Cathay said in a statement to the Hong Kong stock exchange. The preference shares would raise HK$19.5 billion and warrants HK$1.95 billion, subject to adjustment.

Aviation 2020 Ltd., a Hong Kong government-connected entity, is extending a HK$7.8 billion bridge loan.

Air China, Cathay Pacific and Swire Pacific suspended trading on Tuesday, pending the announcement. The suspensions come as Cathay contends with a slump in traffic brought on by the coronavirus outbreak and the travel restrictions that ensued.

Even before the pandemic, Cathay was under enormous financial and political pressures as it found itself caught up in the Hong Kong anti-government protests, which affected traffic numbers and led to the exit of the company’s former chief executive officer. Cathay was criticized by China, protesters and its own workers for its response to the demonstrations.

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