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Cathay Pacific shares soar more than 18% after bailout
[HONG KONG] Cathay Pacific shares soared more than 18 per cent at the open on Wednesday morning, a day after the airline announced a major government bailout to survive the coronavirus crisis.
Shares in the flagship Hong Kong carrier were fetching HK$10.46, up 18.73 per cent, when trading opened on the city's stock exchange.
Those gains were swiftly pared but it was still trading some four percent higher in the early morning.
Like many carriers hammered by the global pandemic, Cathay has seen passenger numbers evaporate in recent months, leaving most of its fleet sitting on the tarmac and the firm haemorrhaging cash.
But the company - and investors - were thrown a lifeline on Tuesday when Hong Kong's government came to the rescue with a plan for a HK$39 billion (S$6.94 billion) bailout.
Trading in Cathay's shares was suspended on Tuesday pending an announcement about the plan, which will also see Hong Kong's government take a six-per cent share in the company and get two board members with observer status.
The bulk of the capital will come from new shares issued to Aviation 2020, a company owned by the government, as well as a HK$7.8 billion bridging loan also from the government.
Under the proposal, Cathay will raise about HK$11.7 billion in a rights issue, while preference shares will be sold to the government for HK$19.5 billion and warrants for HK$1.95 billion, subject to adjustment.