PAL Holdings plans re-IPO

MANILA, Philippines - PAL Holdings Inc. (PAL), tycoon Lucio Tan’s listed flagship airline company, is considering a re-IPO this year to beef up liquidity and raise capital that will support its planned investment program and future growth.

The planned re-IPO (initial public offering) comes almost 10 years since the company did a backdoor listing in 2007.

In a round table discussion with The Star, Tan’s son, Michael said the company is looking at how to go about the planned re-IPO.

A re-IPO is a follow-on offering on an already listed stock. However, given the low free float and low trading liquidity, a listed firm can opt to market the share offering as a re-IPO.

The objectives in doing a re-IPO are usually to increase investor interest in a stock by increasing liquidity and to raise capital.

“We’re still discussing how we’re going to go about it. We need to choose an investment banker first to handle the process,” said the younger Tan, president of LT Group and PAL director.

He said the company hopes to embark on the re-IPO this year on the back of the prevailing positive economic environment.

The elder Tan, the country’s fourth richest man according to Forbes, took over PAL in 1993 and led the company’s rapid fleet expansion. However, the 1997 Asian financial crisis affected the flagship carrier, bringing it on the verge of collapse with a $2.2 billion debt.

But the Tan-led PAL survived the crisis and has since expanded its fleet. 

At present, Tan is now consolidating his airline businesses. 

Just last month, PAL announced its acquisition of Zuma Holdings & Management Corp., another Tan-owned company through a share swap deal.

PAL is acquiring Zuma as it consolidates its subsidiary Philippine Airlines Inc (PAI) and Zuma’s budget carrier Air Philippines Corp., in an arrangement valued at P8.24 billion as the tycoon rationalizes his airline businesses under a single parent company and within a single group of companies. 

The move is meant to increase PAL’s appeal to strategic investors as the legacy airline lures potential partners as part of plans to become a five-star, full service national carrier in the Philippines. 

Zuma is 60 percent owned by Cosmic Holdings Corp. and 40 percent owned by Horizon Global Investments Inc. 

PAL is in talks with potential investors and is seeking those with expertise in running carriers so it can help manage its fleet, said PAL president and chief operating officer Jaime Bautista.

The company is open to strategic investors that are in the airline business.

As it lures investors, the airline has embarked on a major fleet expansion program.

It expects 33 more airplanes until 2024.

PAL is also working closely with the government, specifically the Department of Tourism, Department of Transportation, Civil Aviation Authority of the Philippines and Manila International Airport Authority to provide passengers their desired experience.