Cebu Pacific Air, the low-cost airline controlled by Philippine tycoon Lance Gokongwei and his siblings as part of JG Summit Holdings, said it has raised $250 million through the sale of convertible bonds to the International Finance Corp. and U.S. private equity firm Indigo Partners.
The bonds can be converted into 318.75 million common Cebu Pacific shares at 68 pesos a piece, according to a filing with the Philippine Stock Exchange. The company didn’t disclose the specific investments made by IFC through its IFC Emerging Markets Fund and by Indigo partners through its Philippine subsidiary.
The funds will provide the carrier some much-needed capital. Cebu Pacific, just like most travel-related businesses, suffered a net loss of 22.2 billion pesos ($459.4 million) last year as passenger traffic dropped 78% to 5 million. Both international and domestic travel came to an abrupt halt as the Philippines grappled with the Covid-19 pandemic. The country is among the hardest hit by the deadly virus in Southeast Asia.
“At Cebu Pacific Air, our focus has been on bringing the vaccine into the country and getting back to regular travel,” Gokongwei told attendees to the 2021 Forbes Asia CEO Webinar late last month.
The funds raised from the convertible bond issue form part of the of the $500 million the airline aims to raise as it restructures operations in preparation for a vaccine-led recovery in the travel industry.
“I’m very optimistic about the airline industry returning…there’s certainly a lot of pent-up demand,” Gokongwei later added during the same event. “We’re seeing a huge surge on bookings for the latter part of the year and next year.” he added.
Gokongwei and his sisters Faith, Hope, Lisa, Marcia and Robina debuted on the list of Philippines’ 50 richest people last year after their father John Gokongwei died in November 2019. The siblings were No. 4 on the list with a combined net worth of $4.1 billion.