PAL expects Air Philippines integration in Q2

MANILA, Philippines - The parent firm of Philippine Airlines (PAL) expects to complete the acquisition of Zuma Holdings and Management Corp. within the current quarter.

“The company’s acquisition of Zuma is ongoing and is expected to be completed within the second quarter of 2017,” PAL Holdings Inc. said in a disclosure to the Philippine Stock Exchange yesterday.

PAL Holdings is acquiring Zuma and subsidiary Air Philippines Corp. for P8.24 billion via a share swap deal.

Zuma is 60 percent owned by Cosmic Holdings Corp. and 40 percent by Horizon Global Investments Inc.

Under the share swap deal, PAL Holdings will issue 19 shares for each Zuma share held by Cosmic and Horizon.

Through the acquisition of Zuma and integration of carriers PAL and Air Philippines, PAL Holdings expects to have streamlined processes, improved transportation experience for the riding public, as well as reduced costs and higher revenues.

As PAL Holdings expects to incur additional deficit from the acquisition of Zuma, its board of directors approved an equity restructuring last March 28.

In particular, the board approved to reduce the authorized capital stock to P18 billion with a par value of P0.60 per share, from P30 billion with a par value of P1 per share, without returning any portion of the capital to stockholders.

“The resulting reduction surplus shall be used by the company together with existing APIC (additional paid in capital) and the additional APIC to be booked upon completion of the acquisition of Zuma and its subsidiary, Air Philippines to wipe out (in full or partially) the projected deficit of the company on a consolidated basis,” PAL Holdings said.

The equity restructuring will still need to be approved by stockholders, as well as the Securities and Exchange Commission.

Upon completion of the equity restructuring, PAL Holdings shall revert its par value per share to P1, a move which shall result in the reduction of the number of shares corresponding to the capital without affecting the peso values of the authorized capital and subscribed capital.

After the transaction, PAL Holdings expects corresponding adjustment in the trading price of the company’s shares.