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Cathay Pacific Bailout Comes At Cost To Shareholders

However, the airline’s recapitalization plan should ensure the firm survives the coronavirus pandemic

Ivan Su 12 June, 2020 | 3:26
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Cathay Pacific

Cathay Pacific Airways'
recapitalization plan ensures the firm’s survival during the coronavirus pandemic, but it comes at a slight cost to shareholders. Around half of the HKD 39 billion bailout funds comes from the issuance of HKD 19.5 billion preferred shares to the Hong Kong government. Another 30% of funding will come from warrants and rights issuance at HKD 4.68 per share, or 53% below our previous fair value estimate, translating into around HKD 1.30 per share of value dilution. A low-interest bridge loan offered by the Hong Kong government makes up the remaining 20% of the rescue package.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
Cathay Pacific Airways Ltd0.84 USD-0.80

About Author

Ivan Su  Ivan Su is an equity analyst based in Hong Kong

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