Cathay Pacific’s HK$11.7 billion rights issue oversubscribed as investors bet on recovery of the embattled airline

Name: Cathay Pacific warns of historic HK$9.9 billion loss due to coronavirus pandemic
Uploaded: 2020-08-07T11:47:16.000Z
Duration: 1 min 55 s
Description: Cathay Pacific warns of historic HK$9.9 billion loss due to coronavirus pandemic

Cathay Pacific received applications for 3.43 billion shares compared to the 2.5 billion shares on offer

Discount to buy new shares at HK$4.68 narrowed as Cathay Pacific’s share price continued to slide since the rescue plan was first announced in June

2-MIN READ2-MIN

Cathay Pacific said on Friday that minority investors fully subscribed to its HK$11.7 billion right issue, an important part of the battered airline’s HK$39 billion rescue package. Photo: Edmond So

Georgina LeeandChad Bray

Published: 7:47pm, 7 Aug 2020Updated: 7:47pm, 7 Aug 2020

Cathay Pacific’s HK$11.7 billion (US$1.5 billion) rights issue has been oversubscribed, wrapping up the only item of the three-part HK$39 billion recapitalisation package designed for rescuing the embattled airline that required minority shareholders’ funding.

The company said in a Hong Kong stock exchange filing on Friday evening that the rights issue was 137 per cent oversubscribed, adding that it had received applications for 3.43 billion shares compared to the 2.5 billion shares on offer.

The oversubscription was due to the fact that some shareholders had applied for more shares in excess of their own entitlements, totalling 989.3 million, or 39.5 per cent of the initial offer size, the airline said.

Under the carrier’s seven-for-11 cash call, minority shareholders, who own about 15 per cent of Cathay Pacific’s share capital, were offered the right to subscribe to each new share at HK$4.68.

01:55
Cathay Pacific warns of historic HK$9.9 billion loss due to coronavirus pandemic
Cathay Pacific warns of historic HK$9.9 billion loss due to coronavirus pandemic

The company’s three majority shareholders – Swire Pacific, Air China and Qatar Airways – together hold a combined 85 per cent stake in the airline and had all agreed to subscribe for their rights entitlements.

Cathay Pacific’s share price has been sliding hard since the HK$39 billion rescue package was first announced on June 9. It hit HK$5.53 on Wednesday when the rights issue book was closed, or a mere 18 per cent discount to the rights price. That’s about half of the theoretical discount when the rescue plan was first sold to investors.