THE board of directors of PAL Holdings, Inc., the listed operator of flag carrier Philippine Airlines (PAL), has approved an equity restructuring to wipe off existing deficit and the additional deficit that will be booked upon the acquisition of Zuma Holdings Management Inc. and its subsidiary, Air Philippines, Inc., decreasing its authorized capital stock from P30 billion to P18 billion.
In a disclosure to the Philippine Stock Exchange (PSE) on Wednesday, PAL Holdings said that it will decrease its authorized capital stock from P30 billion divided into 30 billion common shares with a par value of P1.00 per share, to P18 billion divided into 30 billion 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,” it said.
The corporation will amend its Amended Articles of Incorporation to revert its par value per share to P1.00 as soon as the equity restructuring is approved by the Securities and Exchange Commission, the statement said.
The PAL board also approved on Wednesday a similar equity restructuring, whereby PAL shall reduce its par value from P0.20 per share to P0.13 per share to apply the resulting reduction surplus against its deficit as of December 31, 2016.
“The resulting reduction surplus from the foregoing transaction, together with its existing additional paid in capital, shall thereupon be used by PAL to wipe out its deficit as of 31 December 2016,” the statement said.
The company said that as soon as the equity restructuring is approved by the SEC, PAL will amend its Amended Articles of Incorporation to increase its par value to P1.00.
PAL Holdings earlier this month said that it is proceeding with its plan to acquire shares from Zuma after securing the Philippine Competition Commission’s (PCC) approval. Zuma owns 99.97 percent of Air Philippines.
“With the integration of the two airlines under PAL, it is expected that the companies can streamline [their]processes, thereby enhancing the transportation experience of the riding public, reducing costs and increasing revenue,” PAL Holdings said last December.