Philippine Airlines (PAL) creditors who accepted a debt-for-equity deal and a subsequent share swap will hopefully get to sell their stake in PAL Holdings Inc. at a substantial profit once the shares are listed on the Philippine Stock Exchange next week.
In a notice issued by the Philippine Stock Exchange, the new PAL Holdings shares will be listed on January 27, 2025, nine months after the share swap with PAL shares was issued and almost two years after the PAL Holdings board approved the swap of directors.
PAL Holdings will be listing a total of 15.24 billion of its shares which will almost double the current 15.21 billion listed shares and about 57 percent of the firm’s 26.85 billion total outstanding shares.
However, of the 15.24 billion shares to be listed, only 5.04 billion shares belonging to creditors will be tradable since the 10.2 billion shares issued to PAL controlling shareholder taipan Lucio Tan’s Buona Sorte Holdings Inc. will be locked up for 180 days.
The 15.24 billion shares have a transaction value of P17.79 billion since these were issued at P1.25 per share for Buona Sorte and at the par value of P1.00 per share for the creditors. PAL Holdings shares are now trading at P5.19 apiece, translating to a total market value of P79 billion or P26.16 billion for the creditors’ shares for a 400 percent windfall.
On Sept. 27, 2021 and November 25, 2021, PAL Holdings’s Board of Directors and stockholders, respectively, approved the issuance of a total of 10.2 billion common shares (Private Placement Shares) to Buona Sorte, at a subscription price of P1.25 per share.
On February 27, 2023, PAL Holdings’ Board of Directors approved the share-for-share swap transaction with the shareholders of Philippine Airlines, whereby the Company offered to issue a total of 5.04 billion common PAL Holdings shares in exchange for their shares in the airline.
The Private Placement Shares and Share-for-share Swap Shares were issued on April 15, 2024.
In July 2023, PAL Holdings said that, “in addition to the cash previously received by the Corporation as payment for the shares to be issued from the increased capital, the Corporation also received (323.77 million) Common Shares in its subsidiary, Philippine Airlines, Inc. (PAL) owned by certain creditors of PAL in exchange for (5.04 billion) new Common Shares of the Corporation at the rate of 15.57 PHI shares for every 1 PAL share.”
The unsecured creditors include Philippine National Bank but consist mostly of foreign aircraft leasing and financing companies as well as parts suppliers.
While the PHI Board of Directors approved last February the issuance of up to 5.62 billion PHI shares PHI in exchange for up to 360.67 million PAL shares, only 5.04 billion new PHI shares were issued to the unsecured creditors of PAL as not all participated in the share swap transaction.