PAL Holdings (PHI), the parent of Philippine Airlines of bilyonaryo Lucio Tan, has approved the exchange ratios for the share swap with the flag carrier as part of PAL’s reorganization plan.
The exchange ratio that has been agreed upon is 15.57 PHI shares to one PAL share.
According to PHI, PAL engaged an independent appraiser, FTI Consulting Philippines Inc., to assess the valuation of the two companies and provide a fairness opinion on the share swap ratio.
FTI concluded that the fair ratio was in the range of 14.4261 and 16.7987, and thus 15.57 was deemed the recommended ratio.
PAL’s Chapter 11 restructuring included impairing and converting part of the unsecured creditors’ debts into equity of PAL. As a result, these impaired creditors now own approximately 20.1 percent of PAL.
The airline’s reorganization plan includes a mechanism for these impaired creditors to swap their PAL shares into shares of PHI so that they can be traded on the Philippine Stock Exchange.
PAL successfully exited from Chapter 11 proceedings in the US at the end of 2021.
The restructuring plan calls for permanent balance sheet reductions from existing creditors, a 25 percent reduction in fleet capacity, and improvements in the airline’s critical operational agreements. It also includes investments in long-term equity and debt financing from its majority shareholders.