The Philippine Airlines (PAL) Board has decided to do a quasi-reorganization to help PAL wipe out its deficit and effect a 20 percent decrease in capital.
According to sources, the recent PAL Board decision is possibly in preparation for a commercial bond borrowing or an initial public offering (IPO).
Just recently, PAL Holdings Inc., controlled by taipan Lucio Tan, increased its stake in PAL to 85.47 percent through a consolidation of shares held by six companies and four individuals.
PAL Holdings Inc., the publicly listed firm controlled by the Tan group, approved the acquisition of 8.824 billion shares owned by the six companies.
The six companies are Ascot Holdings Inc., Cube Factor Holdings Inc., Pol Holdings Inc., Network Holdings and Equities Inc., Sierra Holdings and Equities Inc., and Maxell Holdings Corp.
Trustmark Holdings, which is also owned by Tan, owns 97 percent of PAL Holdings.
The consolidation of the PAL shares would reportedly facilitate the airlines’ plan to secure new financing either through a commercial bond offering or an IPO.
PAL Holdings also agreed to convert into equity the 50.591 million shares of the six companies equivalent to 82.3 percent in PR Holdings, which has a stake in PAL.
The shares would be acquired by PAL Holdings through a dacion en pago of P12.118 billion of the P23.117 billion outstanding obligation of the six holding companies to PAL Holdings based on the book values of PAL and PR Holdings as of March 31, 2007.
The remaining receivable of PAL Holdings from the six companies after the dacion en pago amounting to P10.999 billion would be converted into additional paid-in capital in the six holding companies.
PAL Holdings also acquired 86.059 million shares owned by Lucio Tan, Mariano Tanenglian, Harry Tan and Joseph Chua.