PCC approval sought for PAL, Air Philippines consolidation
Posted on December 08, 2016
http://www.bworldonline.com/
PAL HOLDINGS, Inc. (PHI) is seeking the Philippine Competition Commission’s (PCC) approval for its planned acquisition of shares from the holding firm that owns Air Philippines Corp. (APC), as tycoon Lucio C. Tan’s group consolidates its airline businesses under one company.
The transaction involves a swap of 19 PAL Holdings shares for one Zuma share.
“The transaction is an internal restructuring of the airline businesses of the Lucio Tan Group in order to bring PAL and PAL Express (also known as Air Philippines) within a single group of companies. In accordance with the Philippine Competition Act, the transaction will be submitted to the Philippine Competition Commission for confirmation that the same does not result in any prohibited activity or anti-competition event,” it said in its regulatory filing on Wednesday.
The restructuring, PAL said, will result in the consolidation of financials and results of operations of Zuma — and indirectly, of PAL Express.
With the integration of the two airlines under PAL Holdings, “the companies can streamline its processes thereby enhancing the transportation experience of the riding public, reducing costs and increasing revenue,” it added.
PAL said Zuma is currently awaiting the Securities and Exchange Commission’s (SEC) approval of its application to reduce its par value from P100 to P1. In addition, PAL will await feedback from the PCC regarding the transaction.
“As soon as the PCC clears the transaction and the Zuma application with the SEC shall have been approved, the parties shall proceed to execute the relevant deeds of exchange,” PAL said in its disclosure.
PAL earlier said that Zuma owns 99.97% of APC or Airphil Express which is engaged in the air transportation of passengers and cargo. The holding firm is not engaged in any commercial activity apart from holding investments in Air Philippines Corporation, it added.
Meanwhile, the airline said its financial advisor Unicap, submitted a fairness report that assigned an indicative fair value of P7.997 billion to P8.851 billion to the Zuma shares. On a per share basis, this translated to a value of P92.20 to P102.06.
PAL said management decided to use the value P95 per share for the Zuma shares, which is within the mid-range of the recommended indicative values in the Unicap report.
PAL Holdings saw a net loss of P2.009 billion in the quarter ending September from a P251.257-million income during the comparable period in 2015, its quarterly report showed, which the Company President and Chief Operating Officer Jaime J. Bautista attributed to stiff competition and the “lean season” for the airline industry.
PAL, nonetheless, still posted a profit in the nine-month period, recording a P2.599-billion net income in first nine months of 2016. The airline still expects to end the year with higher revenues.
Shares in the company closed at P5.44, up by 8.80% from its previous close of P5 apiece.
