PAL Holdings board OKs equity restructuring to wipe out deficit

March 29, 2017

The board of directors of Philippine Airlines (PAL) Holdings Inc. approved an equity restructuring to wipe off its existing deficit and the additional deficit that will be booked upon the acquisition of Zuma Holdings Management, Inc. (ZUMA) and its subsidiary, Air Philippines, Inc.

In a disclosure to the Philippine Stock Exchange on Wednesday, PAL Holdings shall decrease its authorized capital stock from P30 billion divided into 30,000,000,000 common shares with a par value of P1.00 per share to P18 billion divided into 30,000,000,000 common shares with a par value of P0.60 per share, without returning any portion of the capital to stockholders.

“The resulting reduction surplus from the foregoing transaction shall thereupon be used by the Corporation, together with its existing additional paid in capital and the additional paid-in capital to be booked upon the completion of the acquisition of ZUMA to wipe out its projected deficit as of 30 April 2017 (tentatively), on a consolidated basis,” the statement said.

After the restructuring shall be approved by the Securities and Exchange Commission “  simultaneous therewith”, PAL Holdings shall amend its amended articles of incorporation to revert its par value per share to P1.00.

The foregoing amendments to its amended articles of incorporation shall be submitted to the shareholders for approval at the annual stockholders meeting on May  25 2017, the disclosure said. The proposed charter amendments are expected to be approved by the shareholders and PAL Holdings shall file an application for equity restructuring with the SEC, it added.

In an earlier meeting Wednesday by  Philippine Airlines, Inc.  the board of directors approved a similar equity restructuring where PAL shall reduce its par value from P0.20 per share to P0.13 per share so it can apply the resulting reduction surplus against its deficit as of December 31 2016.

Subject to approval of its shareholders at a meeting called for such purpose, PAL shall decrease its authorized capital stock from P20 billion divided into 100,000,000,000 common shares with a par value of P0.20 per share to P13 billion divided into 100,000,000,000 common shares with a par value of P0.13 per share, without returning any portion of the capital to stockholders.

“The resulting reduction surplus from the foregoing transaction, with its existing additional paid in capital, shall thereupon be used by PAL to wipe out its deficit as of  December 31, 2016,” it said

As soon as the equity restructuring shall have been approved by the Securities and Exchange Commission, or simultaneous therewith, PAL shall amend its amended articles of incorporation to increase its par value to P1.00. DMS