PAL hikes capital to P23 billion

MANILA, Philippines - PAL Holdings, the parent company of Philippine Airlines (PAL), is increasing its authorized capital stock from P20 billion to P23 billion in a bid to raise more funds for the expansion of the flag carrier and to accommodate the entry of San Miguel Corp. in PAL.

PAL Holdings’ majority shareholder, Trustmark Holdings Corp., is subscribing to the increase in authorized capital as well as certain unissued shares of PAL Holdings, amounting to P17 billion.

PAL is also increasing its authorized capital, of which 85 billion common shares worth P17 billion will be subscribed to by PAL Holdings.

SMC president Ramon Ang confirmed in a text message to The STAR that this is part of the investment agreement entered into between SMC and PAL.

Last April, Trustmark Holdings  entered into investment agreements with a unit of SMC, resulting in the issuance of shares to the San Miguel Group, under which the latter will take a minority stake in PAL Holdings.

This investment will comprise 49 percent of PAL Holdings.

SMC is buying into PAL and affiliate budget carrier Air Philippines Corp. (AirPhil) through several layers of holding companies. This will lead to SMC’s acquisition of 49 percent of PAL’s publicly-listed parent firm PAL Holdings, which in turn will give it effective control of at least 40 percent of PAL.

As part of the package, SMC would get 49 percent of AirPhil. SMC would pay $500 million for these indirect stakes in PAL and AirPhil.

PAL Holdings said the investment by SMC through Trustmark will be flowed down to PAL which is expected to strengthen and enhance the operations of the airline.

The investment will be made by SMC through a wholly-owned unit, San Miguel Equity Investments Inc. (SMEII). Under the agreement, Trustmark and Zuma Holdings and Management Corp. -the holding companies of PAL and AirPhil – will issue new shares to SMEII.

As approved by the board of PAL Holdings last Tuesday, the company will increase its authorized capital stock to P23 billion divided into 23 billion common shares with a par value of P1.

As a consequence, PAL Holdings will be amending its articles of incorporation to reflect the increase in the authorized capital stock.

The PAL Holdings board also approved the subscription by Trustmark Holdings of P17 billion common shares of the former at P1 per share, at a total subscription price of P17 billion, a portion of which shall be issued out of the current unissued capital stock of PAL Holdings and the balance out of said increase in the authorized capital stock.

PAL Holdings will likewise subscribe to 85 billion common shares of PAL at 20 centavos per share, amounting to P17 billion, out of the increase in the authorized capital stock of PAL.