Stock Commentary

PAL shareholders approve huge authorized capital increase, Lucio Tan’s private placement, and waiver of minority rights

Merkado Barkada
PAL shareholders approve huge authorized capital increase, Lucio Tanâs private placement, and waiver of minority rights

The company’s shareholders approved measures that were already approved by the board, such as the increase in PAL’s [PAL susp] authorized capital stock from P13.5 billion to P30.0 billion, and the approval of Lucio Tan’s fresh injection of cash through a private placement with one of his private companies, Buona Sorte Holdings, Inc.

The shareholders’ waiver of their minority rights means that the minority shareholders will not have the opportunity to partake in a follow-on public offering on the same terms as Buona Sorte Holdings.


“Buona Sorte” is Italian for “good luck”, which feels like an oddly appropriate name for the entity that will inject yet another massive pile of Lucio Tan’s cash into the value incinerator known as Philippine Airlines.

Lucio Tan will need all the buona sorte that he can get for this plan to work, considering the abysmal state of domestic and international travel in the Philippines, and the bloated/obsolete nature of the PAL business model that the company still plans to use amid whatever future recovery that it will attempt.

The minority waiver is telling. That’s basically everyone else being like: “Nah, Lucio, we’re good.

You do you, but we’re going to sit this one out.” Don’t feel bad for those minority holders, though: Lucio Tan’s (so far?) unlimited supply of fresh fuel for PAL’s cash-fired engines is the only hope they have. Without Lucio Tan, and Lucio Tan alone, PAL would have already died this year.

Don’t get me wrong, that doesn’t mean that what he’s doing is smart, right, or reasonable, but it does mean that he should get 150% of the credit if this gamble pays off.


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