Swire Pacific to raise HK$4.7bn via convertible bonds, could cut Cathay stake by 5.9%

Swire Pacific announced the issuance of HK$4.7 billion one-year convertible bonds, which will be exchanged for shares in its subsidiary Cathay Pacific Airways. If fully exercised, Swire would reduce its stake in Cathay by 5.9 percent, from 45.1 percent to 39.2 percent, while remaining the largest single shareholder.

The zero-coupon bonds have an initial exchange price of HK$13.18 per Cathay share, representing a 2.9 percent premium over Cathay's closing price of HK$12.81 on Tuesday. Investors can exercise the exchange rights from 41 days after issuance.

Swire said the proceeds would be used for general working capital, adding that the issuance would increase liquidity, strengthen its balance sheet and enhance financial flexibility while retaining a material long-term strategic stake in Cathay. The company said it has no intention of proposing any major changes to Cathay's governance or management.

In March, Swire sold a 2.52 percent stake in Cathay for about HK$1.8 billion after its shareholding was passively increased following a share buyback by Cathay from another major shareholder.

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