But he needs another $150 million to pay off CebuPac’s aircraft lease payments, maturing debt and passenger refunds in 2021.
This was revealed in a disclosure by Cebu Air Inc., CebuPac’s parent, as it gave more details on how Gokognwei planned to use the $250 million he planned to raise from the listed firm’s convertible preferred shares stock rights offering from February 26 to March 4, 2021.
The estimated price of the CEB preferred shares was set between 74 cents (P35.52) and 84 cents (P40.32). CEB shares closed at P51.40 on January 25.
Gokongwei revealed that nearly half of the proceeds would be used to repay the $100 million emergency fund advanced by JG Summit Philippines Ltd. after global and local air travel was locked down to contain the coronavirus for the most part of 2020.
Gokongwei reported that CebuPac needed $72.3 million for principal payments on its debt and $71.3 million for aircraft lease payments due in 2021.
Gokognwei also revealed that CebuPac needed $6.4 million to pay for the passenger refunds “in case cash inflows from operations become insufficient as a consequence of the COVID-19 pandemic’s impact to health and travel related concerns.”
But Cebu Air said these funding allocations were just a “best estimate of the use of proceeds.”
“The plans may change based on factors including changing market conditions or new information regarding the cost or feasibility of the plans. The Corporation’s cost estimates may also change as actual costs may be different from the budgeted costs. For these reasons, the Corporation may find it necessary or advisable to reallocate the net proceeds with the categories described above, or to alter the plans, including the abandonment of the projects described above and/or pursuit of different projects,” said Cebu Air.
Cebu Pacific has opted to raise funds on its own after its appeal, along with other members of the Air Carriers Association of the Philippines, for massive government subsidies and credit cover amounting to P8.6 billion every month did not fly due to public opposition against using taxpayers’ money to save bilyonaryos from financial ruin.