Cathay Pacific Announces HK$39 Bln Recapitalisation Proposal

Cathay Pacific Airways Ltd: * ANNOUNCES HK$39.0 BILLION RECAPITALISATION PROPOSAL

* RECAPITALISATION PROPOSAL INVOLVES BRIDGE LOAN TO BE EXTENDED BY AVIATION 2020 TO CO IN AMOUNT OF HK$7.8 BILLION * WILL CONTINUE TO EXPLORE OPPORTUNITIES TO IMPROVE CATHAY PACIFIC'S CAPITAL STRUCTURE

* RIGHTS ISSUE OF 2.5 MILLION SHARES OF 7 RIGHTS SHARES FOR EVERY 11 EXISTING SHARES AT SUBSCRIPTION PRICE OF HK$4.68 TO RAISE HK$11.7 BILLION * MAY FURTHER ACCESS EQUITY AND DEBT CAPITAL MARKETS IN ORDER TO STRENGTHEN BALANCE SHEET

* INTENDS TO IMPLEMENT A FURTHER ROUND OF EXECUTIVE PAY CUTS AND A SECOND VOLUNTARY SPECIAL LEAVE SCHEME FOR EMPLOYEES * IN LONGER TERM, ALL ASPECTS OF CATHAY PACIFIC GROUP'S BUSINESS MODEL WILL BE RE-EVALUATED

* EXPLORED AVAILABLE OPTIONS & BELIEVES THAT RECAPITALISATION IS REQUIRED TO ENSURE IT SUFFICIENT LIQUIDITY TO WEATHER CURRENT CRISIS * HAS BEEN LOSING CASH AT RATE OF HK$2.5 TO 3.0 BILLION PER MONTH SINCE FEB 2020

* SEPARATE IRREVOCABLE UNDERTAKINGS BY SWIRE PACIFIC, AIR CHINA AND QATAR AIRWAYS TO SUBSCRIBE AT RIGHTS SUBSCRIPTION PRICE * AGREED FOR AVIATION 2020 TO APPOINT 2 OBSERVERS TO ATTEND BOARD MEETINGS AND HAVE ACCESS TO MANAGEMENT AND INFORMATION

* AVIATION 2020 TO SUBSCRIBE FOR 195 MILLION PREFERENCE SHARES FOR HK$19.5 BILLION * TO ISSUE TO AVIATION 2020 WARRANTS TO SUBSCRIBE FOR UP TO 416.7 MILLION SHARES AT EXERCISE PRICE OF HK$4.68, OR TOTAL PRICE OF HK$1.95 BILLION

* EXPECTS TO DESPATCH RIGHTS ISSUE DOCUMENTS TO QUALIFYING SHAREHOLDERS ON OR AROUND 22 JULY * SHARES ARE EXPECTED TO BE DEALT IN ON AN EX-RIGHTS BASIS FROM 15 JULY

* EXPENSES IN RELATION TO RECAPITALISATION ESTIMATED TO BE ABOUT HK$100 MILLION, TO BE BORNE BY CO * ON PREFERENCE SHARES & WARRANTS ISSUE, SWIRE PACIFIC GAVE UNDERTAKING TO AVIATION 2020 IT WILL REMAIN CONTROLLING SHAREHOLDER OF CO

* COVID-19 BIGGEST CHALLENGE TO AVIATION INDUSTRY CO EVER WITNESSED; DOES NOT SEE MEANINGFUL RECOVERY FOR EXTENDED PERIOD * AVIATION 2020 LTD OWNED BY FINANCIAL SECRETARY, ESTABLISHED UNDER FINANCIAL SECRETARY INCORPORATION ORDINANCE Source text for Eikon: Further company coverage: