PAL parent firm raising capital to P30B

MANILA, Philippines - Publicly-listed PAL Holdings Inc., the parent firm of national flag carrier Philippine Airlines (PAL), is further beefing up its capital stock by another 30 percent to beef up its capitalization to fund the airline’s ongoing re-fleeting program.

PAL Holdings assistant corporate secretary Cecilia Pesayco said in a letter to the Philippine Stock Exchange (PSE) that the company’s board of directors approved the increase in its authorized capital to P30-billion from P23 billion during a meeting last Monday.

Pesayco said the company’s authorized capital stock would consist of 30 billion shares with a par value of P1 per share from the current 23 billion shares with a par value of P1 per share.

She said the company’s board likewise approved the amendment to its Amended Articles of Incorporation to reflect the increase as well as the change in the accounting period to calendar year December 31 instead of fiscal year ending March 31.

Just last month, PAL Holdings got the green light from the Securities and Exchange Commission (SEC) to increase its capitalization to P23 billion from P20 billion.

The increase in authorized capital stock  stemmed from the entry of diversified conglomerate San Miguel Corp. into PAL and in order to raise more funds for the expansion of the flag carrier that is acquiring 100 aircraft as part of its re-fleeting program.

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

Trustmark Holdings entered into investment agreements in April last year with a unit of SMC, resulting in the issuance of shares to the diversified conglomerate that took a 49 percent stake in PAL Holdings.

SMC bought 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.

The investment was made by SMC through a wholly-owned unit, San Miguel Equity Investments Inc. (SMEII).