For the first time in history, the Hong Kong government directly saves a private company. Cathay Pacific on Tuesday made public refinancing plan, which involves the sale of 6.1% of the carrier’s shares to the government of the autonomous region.
An airline rescue plan involves three steps. The first is the issuance of preferred shares worth $ 2.5 billion, which will go to the Hong Kong government. The second is the issue of additional shares for existing shareholders for $ 1.5 billion. Finally, the third stage is to receive a short-term loan from the government for $ 1 billion.
The main shareholders of the largest Hong Kong air carrier will remain the British corporation Swire Pacific and the Chinese airline Air China, but their joint stake in Cathay Pacific will decrease from 75% to 70.4%. At the same time, one of the options for rescuing Cathay Pacific was to increase the share of Air China, but the regional government chose to resort to the purchase of a share in a private company for the first time in order to save it and thus prevent the increase of the share of the Chinese airline.
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