Cathay Pacific raises $870 mln in convertible bonds to shore up liquidity, shares fall (updated)

Great Wall Pan Asia Holdings

28/01/2021 02:51

* Shares down as much as 9.4% in worst session since 2008
    * Bonds will dilute existing shareholders on conversion
    * Cathay has warned of rising cash burn due to quarantine
rules
    * FedEx plans to relocate HK-based pilots to San
Francisco-report

 (Adds share price move, dilution impact, FedEx pilot move)
    Jan 28 (Reuters) - Hong Kong's Cathay Pacific Airways Ltd
 0293.HK  said on Thursday it would issue HK$6.74 billion
($869.51 million) of convertible bonds to shore up liquidity,
sending shares down as much as 9.4% in the worst daily decline
in 12 years. urn:newsml:reuters.com:*:nL1N2K304C
    The five-year bonds will be dilutive to existing investors,
representing 10.89% of the company's enlarged capital once they
are converted into shares.
    The bonds have an initial conversion price of HK$8.57 a
share, a 30% premium to its last closing price before the issue
was announced, and will carry a coupon rate of 2.75%, the
airline said in an announcement to Hong Kong's stock exchange.
 urn:newsml:reuters.com:*:nL1N2K20JS
    Cathay on Monday warned passenger capacity could be cut by
about 60%, cargo capacity would fall by 25% and its monthly cash
burn would rise if Hong Kong enacts new COVID-19 measures that
would require flight crew to quarantine for two weeks upon their
return home.  urn:newsml:reuters.com:*:nL1N2K20JS
    The airline said the expected move would increase monthly
cash burn by around HK$300 million to HK$400 million, on top of
the current HK$1 billion to HK$1.5 billion.
    Cargo carrier FedEx Corp  FDX.N  is planning a temporary
relocation of its 180 Hong Kong-based pilots and their families
to San Francisco as soon as Feb. 1 as a result of the expected
quarantine measures, the South China Morning Post reported on
Thursday, citing a memo to staff.  urn:newsml:reuters.com:*:nL4N2K30TG
    FedEx did not respond immediately to a request for comment.
    To help bolster its balance sheet while international
borders remain closed, Cathay last June received a $5 billion
rescue package led by the Hong Kong government.  urn:newsml:reuters.com:*:nL4N2DM07T
    Assuming full conversion of the bonds and the Hong Kong
government's exercise of warrants, top shareholder Swire Pacific
Ltd's  0019.HK  stake in Cathay will be diluted to 37.9% from
45% and Air China Ltd's  601111.SS  stake will fall to 25.3%
from 30%.
($1 = 7.7515 Hong Kong dollars)

 (Reporting by Jamie Freed in Sydney; additional reporting by
Donny Kwok in Hong Kong; Editing by Sam Holmes and Gerry Doyle)
 ((Jamie.Freed@thomsonreuters.com;))