Cebu Air divests, buys out stakes in SIAEC tieups

29-Oct-2020 Intellasia | PhilStar | 6:02 AM Print This Post

Cebu Air Inc., the operator of budget carrier Cebu Pacific, is buying out its partner in a maintenance, repair and overhaul company, while also selling its entire stake in another MRO firm to optimise operational efficiencies.

In a stock exchange filing, Cebu Air said it has signed a share sale and purchase agreement with SIA Engineering Co. Ltd (SIAEC) for the acquisition of its 51 percent stake in Aviation Partnership (Philippines) Corp. (APPC) for $5.61 million.

APPC is a joint venture between SIAEC and Cebu Air established in 2005. SIAEC holds 51 percent stake in the company, while the remaining 49 percent is held by Cebu Air.

APPC provides line maintenance, light aircraft checks, technical ramp handling and other MRO services to Cebu Pacific and other carriers.

The company is positioned in Manila, Cebu, Davao and Clark as well as other secondary airports in the country.

“The acquisition is in line with Cebu Air’s overall strategy to more closely align its line maintenance operations and strategic objectives with Cebu Air’s network and service requirements for significant operational efficiencies and optimisation of resources for an even stronger competitive advantage,” the publicly listed company said.

Cebu Air said the acquisition is still subject to the satisfaction of conditions precedent set out in the agreement. Following these, APPC will become a wholly owned subsidiary of Cebu Air.

Meanwhile, in a separate disclosure, the company said it has also signed another share sale purchase agreement with SIAEC to sell its entire 35 percent shareholding in SIA Engineering (Philippines) Corp. (SIAEP) for $7.74 million.

SIAEP, which is currently 65 percent owned by SIAEC and 35 percent by Cebu Air, is in the business of providing airframe maintenance, repair, de-lease checks, cabin retrofits and overhaul services for 737, A320 and A330 aircraft, as well as line maintenance services at Clark.

“This divestment is in line with Cebu Air’s strategy to streamline its fleet management and rationalise its aircraft base maintenance, repair and overhaul offerings to optimise its operational efficiency and further strengthen its core competencies,” the company said.

The divestment is also subject to the satisfaction of conditions precedent set out in the agreement, following which, the Gokongwei-owned firm will cease to have any equity interest in SIAEP.

Cebu Pacific, the country’s largest budget airline, posted a P9.14 billion net loss in the first half, with revenues plunging by 61.2 percent to P17.33 billion due to the impact of the COVID-19 pandemic.

It announced earlier this month plans to raise up to $500 million in fresh capital through the issuance of convertible preferred shares and private placement of convertible bonds to strengthen its balance sheet as the aviation industry continues to face the challenges brought about by the pandemic.

The fundraising exercise, which is seen to “enable the company to navigate the current environment and thrive in the new normal,” will involve the issuance of up to $250 million in new convertible preferred shares, as well as another $250 million in privately placed convertible bonds.


Category: Philippines

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