Cebu Air Inc., operating under the Cebu Pacific brand, has increased its stake in 1Aviation Groundhandling Services Corporation (1AV) to a controlling 60 percent through a debt-to-equity conversion.
In a disclosure to the Philippine Stock Exchange, the airline said it has signed a Deed of Assignment of Credit and Subscription with 1AV for the assignment of credit and subscription to 1.13 million shares with a par value of P100 per share for a total of P113 million.
“The subscription of additional shares arose from the agreement of the 1AV stockholders to convert certain shareholder loans and advances into equity or common stock," Cebu Air said.
The Debt-to-Equity Conversion will increase CEB's ownership stake in 1AV from the current 40 percent to 60 percent. These shares will be issued from the total unissued shares of 1AV.
The other shareholders, Philippine Airport Ground Support Solutions, Inc. (PAGSS) and Jefferson G. Cheng, have both agreed to convert their outstanding loans in 1AV, amounting to P34.23 million from Cheng and P2.78 million from PAGSS, respectively, or a total of P37 million, into equity through the issuance of 370,000 common shares.
As a result of this conversion, PAGSS and Cheng will collectively hold a 40 percent ownership interest in 1AV.
The Debt-to-Equity Conversion arises from certain loans and advances extended by the stockholders to 1AV in the total amount P150 million. The Debt-to-Equity Conversion will reduce 1AV's debt and improve its financial health.
At the same time, CEB will increase its equity ownership in 1AV, strengthening its management influence to enable it to more effectively integrate 1AV's services with its operations, to reduce its operational costs while improving its service quality, particularly in groundhandling and logistical support.
1AV is one of the leading providers of ground handling services in the Philippines. Founded in March 1, 2018, 1AV is currently present in 34 airports across the Philippines with 6,224 employees, and continues to expand its operations supporting the country's largest airline and other international carrier.