Corporate regulator OK’s Philippine Airlines’ equity restructuring

THE SECURITIES and Exchange Commission (SEC) has approved the application of Philippine Airlines, Inc. (PAL) to decrease its authorized capital stock, alongside the increase of the par value of each share.

In a disclosure to the stock exchange on Tuesday, the company’s parent, PAL Holdings, Inc. said the SEC last Sept. 15 granted approval to lower PAL’s authorized capital stock to P13 billion from the current P20 billion. This entails a drop in the par value of each share to 13 centavos from 20 centavos.

The equity restructuring is aimed at erasing PAL’s deficit ahead of its plan to take in a new strategic investor.

In a separate disclosure earlier this month, PAL said that the decrease in authorized shares is part of the flag carrier’s quasi- reorganization, which will eliminate the deficit it accumulated due to the company’s losses before its threeyear period of profitability.

“The move to decrease authorized capital stock will allow the flag carrier to declare dividends and attract more investors,” the company said.

Following the decrease in authorized capital stock, PAL has also been granted permission to increase the par value of each share to P1 from 13 centavos, effectively decreasing the authorized shares to 13 billion from 100 billion.

Earlier this year, PAL President and Chief Operating Officer Jaime J. Bautista bared talks with a strategic investor who is looking to acquire “less than 40%” of the company.

The strategic investor is expected to help PAL better manage its fleet and reach five- star full service carrier status by 2020. PAL currently has a three- star rating.

PAL Holdings booked a P500.9- million net loss in the second quarter of 2017, against a P1.6-billion profit in the same period in 2016. The company noted that high fuel costs pulled down its bottom line, despite an increase in both passenger and cargo revenues during the quarter.

Including first quarter results, PAL Holdings’ net loss reached P1.65 billion, compared to a profit of P4.61 billion in the same period a year ago.

Shares in PAL Holdings dropped a centavo or 0.19% to P5.16 each at the Philippine Stock Exchange on Tuesday. —