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Cebu Pacific has raised its stake in ground handler 1Aviation Groundhandling Services, Corp. to 60% from 40%
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The low-cost carrier’s parent firm Cebu Air, Inc. signed a deed of assignment of credit and subscription with 1AV for the assignment of credit and subscription to 1.130 million shares
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Each of the shares has a par value of P100 per share, amounting to a total of P113 million
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Cebu Pacific said the debt-to-equity conversion will reduce 1AV’s debt and improve its financial health
Cebu Pacific has raised its stake in ground handler 1Aviation Groundhandling Services, Corp. (1AV) to 60% from 40% via a debt-to-equity conversion deal.
In a regulatory disclosure on October 29, the low-cost carriers’ parent firm Cebu Air, Inc. said it signed with 1AV a deed of assignment of credit and subscription to 1.130 million shares, each with a par value of P100 per share, amounting to a total of P113 million.
Cebu Pacific on March 1, 2018 founded 1AV, and sold off 60% shares in July 2018 to Philippine Airport Ground Support Solutions, Inc. (PAGGS) and its president, Jefferson Cheng.
Cebu Pacific said the debt-to-equity conversion arose from certain loans and advances extended by the stockholders to 1AV in the total amount P150 million. All parties agreed to convert the same into equity, with Cebu Pacific’s debt portion at P113 million.
Cebu Pacific said PAGGS and Cheng both agreed to convert their outstanding loans in 1AV, amounting to P34.225 million from Cheng and P2.775 million from PAGSS, respectively, or a total of P37 million, into equity through the issuance of 370,000 common shares. As a result of the conversion, PAGSS and Cheng will collectively hold a 40% ownership interest in 1AV.
Cebu Pacific, meanwhile, will acquire a 60% ownership stake in 1AV, while also strengthening 1AV’s financial position by reducing its liabilities.
Cebu Pacific said the debt-to-equity conversion will reduce 1AV’s debt and improve its financial health.
As a majority owner, Cebu Pacific said it can integrate 1AV’s services more seamlessly with its operations, creating synergies that could reduce operational costs and improve service quality, particularly in groundhandling and logistical support.
The application of the debt-to-equity conversion is subject to the necessary approval by the Securities and Exchange Commission.
1AV is present in 34 airports across the Philippines with 6,224 employees, and continues to expand its operations supporting the country’s carriers.
