Swire sells down Cathay Pacific stake at 7% discount, raising $613 million

Conglomerate Swire Pacific Ltd. (0019.HK) on Wednesday announced a placement of nearly 363 million shares of Cathay Pacific Airways (0293.HK) — representing 5.96% of the airline’s issued shares — to raise HK$4.79 billion ($613 million). It said it will use the proceeds to repurchase bonds with a principal amount of HK$4.69 billion.

Originally slated to mature in 2027, the bonds will be repurchased at a price set at 109.08% of their principal amount, translating to a total redemption cost of HK$5.12 billion.

Swire set the placement price at HK$13.20 per share, representing a 7.7% discount to Cathay’s Tuesday closing price of HK$14.30 and a 9.5% markdown from the five-day moving average of HK$14.58. Following the placement, Swire’s equity stake in Cathay Pacific dropped to 39.15%.

The share placement is expected to yield HK$1.12 billion in gains for Swire, while the overall maneuver — pairing the placement with the bond buyback — is expected to generate a net profit of roughly HK$704 million for the conglomerate. Swire further pledged a 180-day lock-up period for its remaining holdings in the airline.

Cathay’s stock retreated 1.14% on Wednesday to end the session at HK$13.88, while Swire closed flat at HK$105.90. Cathay Pacific edged up 0.14% when the market opened on Thursday, while Swire remained flat.

By Lau Chi Hang

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