Cebu Air Inc., the operator of Cebu Pacific, raised its investment in a leading Philippine ground handling services provider, acquiring an additional 20-percent stake.
The airline unit of the Gokongwei Group said it signed an agreement with 1Aviation Groundhandling Services, Corp. (1AV) to facilitate a debt-to-equity conversion.
Cebu Pacific will acquire an additional 20-percent stake in 1AV, totaling 1,130,000 shares valued at P113 million.
The subscription of additional shares arose from the agreement of the 1AV stockholders to convert certain shareholder loans and advances into equity/common stock.
The debt-to-equity conversion will increase Cebu Pacific’s ownership in 1AV from 40 percent to 60 percent. These shares will be issued from the total unissued shares of 1AV.
“The debt-to-equity conversion arises from certain loans and advances extended by the stockholders to 1AV in the total amount P150,000,000. All parties agreed to convert the same into equity, with CEB’s debt portion at P113 million,” Cebu Pacific said.
Cebu Pacific will have a 60-percent ownership stake in 1AV, while also strengthening 1AV’s financial position by reducing its liabilities.
“As a majority owner, CEB can integrate 1AV’s services more seamlessly with its operations, creating synergies that could reduce operational costs and improve service quality, particularly in groundhandling and logistical support,” the airline said.
The other shareholders, Philippine Airport Ground Support Solutions Inc. (PAGSS) and Jefferson G. Cheng (JGC), both agreed to convert their outstanding loans in 1AV, amounting to P34,225,000 from JGC and P2,775,000 from PAGSS, respectively, or a total of P37 million, into equity through the issuance of 370,000 common shares.
PAGSS and JGC will collectively hold a 40-percent ownership interest in 1AV as a result of the conversion.
1AV is present in 34 airports across the Philippines, with 6,224 employees and continues to expand its operations supporting the country’s largest airlines and other international carriers.
