Holding firm takes direct control of PAL
Publicly-listed PAL Holdings Inc. now directly owns 85.47 percent of flag carrier Philippine Airlines (PAL) after it acquired the shares held by six holding companies and by the Lucio Tan group.
Tan and his group currently own 97 percent of PAL Holdings through Trustmark Holdings.
Prior to the acquisition, PAL Holdings indirectly owned 84.67 percent of PAL through the six holding companies which are 100 percent owned by PAL Holdings. The six companies, in turn, owned 82.3 percent of PR Holdings before the acquisition, which was approved by PAL Holdings’ board Thursday.
PAL president Jaime Bautista explained that the streamlined corporate and ownership structure will make PAL more attractive for financing either through loans or equity.
Also yesterday, PAL said it has entered into an agreement with international plane maker Airbus for an option to buy four additional Airbus 320s. The list price for each plane is around $60 million, or a total of $240 million. If PAL decides to exercise the option, the narrow-bodied planes should arrive between 2009 and 2012.
This year, six new Airbus 320s are scheduled to arrive, while another five are scheduled next year. PAL currently has 16 operating, 320s some of which will be retired as soon as the new planes arrive, bringing its total new 320s to 24 by 2012.
Aside from this, PAL is acquiring four Boeing 777-300 ERs with an option to buy two more. Each has a list price of $250 million. These wide-bodied planes equipped for long-haul flights will allow PAL to explore the possibility of re-entering
The new planes are being financed either through commercial loans or through export credit agency support without any third-party guarantee.
By 2012, PAL’s fleet will increase to 43 planes, which will include six B777, five B747-400s, four Airbus A340-300s, eight Airbus A330-300s and 24 A320s, assuming all options to buy are exercised. Right now, the ratio of owned to leased planes is 2:1.
“By then, we will have the youngest fleet of narrow-bodied planes in the region, with an average age of a little over a year,” Bautista pointed out.
PAL Holdings acquired the PAL shares owned by the six holding companies totalling 8.82 million shares equivalent to 81.57 percent of PALs issued and outstanding common shares. These holding companies and their respective shares are Ascot Holdings (1.06 billion shares), Cube Factor Holdings (1.12 billion), Pol Holdings (3.88 billion), Network Holdings and Equities (1.02 billion) and Maxell Holdings Corp. (760 million).
It also acquired the shares owned by the six holding companies in PR Holdings totalling 50.59 million shares equivalent to 82.3 percent of the latter’s outstanding common shares. PR Holdings in turn owns three percent of PAL.
It will be recalled that in 1992 when PAL was privatized by the government, PR Holdings was used as the vehicle to acquire government shares in the flag carrier, resulting in PAL Holdings indirectly owning the Lucio Tan shares in PR Holdings.
The shares will be acquired by way of dacio en pago to pay off P12.12 billion of the P23.12 billion outstanding obligation of the six holding companies to PAL Holdings. The remaining receivable of the company from the six companies after the dacion totalling P10.99 billion will be converted into additional paid-in capital in the said firms.
In a disclosure to the Philippine Stock Exchange, PAL Holdings added that in relation to its addional paid-in capital which resulted from the earlier conversion into equity of the company’s obligations to Trustmark, the additional paid-in capital will be used to wipe out PAL Holdings’ deficit.
PAL Holdings likewise acquired the PAL shares owned by Lucio Tan (22.15 million shares), Mariano Tanenglian (22.7 million), Harry Tan (21.76 million), and Joseph Chua (20 million), or a total of 86.06 million shares equivalent to 0.8 percent of PAL’s total outstanding common shares. — With Zinnia B. Dela Peña
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