Cathay repurchases remaining HK$9.7 billion of HK govt’s preference shares

Cathay Pacific Airways has bought back the remaining 50% of preference shares, worth about HK$9.75 billion, that were issued to the Hong Kong government as part of the Cathay Group’s recapitalisation in 2020. 
 
The Cathay Group’s overall HK$39 billion recapitalisation financing in 2020 included the issuance of HK$19.5 billion preference shares with warrants to the government; an HK$11.7 billion rights issue of ordinary shares to existing shareholders; as well as a HK$7.8 billion bridge loan facility provided by the  government. 
 
Together with the initial 50% of the preference shares brought back in December 2023, Cathay has fully repaid the government’s HK$19.5 billion investment.  
 
In addition, the Cathay Group has also paid the remaining preference share dividends up to Wednesday, bringing the total payout to HK$2.44 billion. 
  
Cathay Group CEO Ronald Lam said: “Today marks an important milestone for Cathay as we fully repay the invaluable support that the government provided to us during our recapitalisation. Our journey to rebuild Cathay for Hong Kong has been progressing well and this has enabled us to fully redeem the preference shares only 18 months after Hong Kong reopened.” 
 
“We are extremely grateful for the support and guidance that the government, its two observers to the board, and all of our shareholders have shown Cathay, both during and since the pandemic,” Lam said. 
  
“As we turn the page on this significant chapter in Cathay’s history, our focus now is firmly on the future. We continue to make substantial investments to grow Cathay for the long term, and deliver on our ongoing commitment to being a positive driving force supporting Hong Kong’s international aviation hub development,” Lam added. 
 
As part of the investment, the government has pumped HK$27.3 billion into Cathay Pacific through the Land Fund, comprising preference shares of HK$19.5 billion and a bridging loan of HK$7.8 billion, according to the city’s finance chief Paul Chan.  
 
Chan said the investment not only helped Cathay Pacific gain liquidity to tide over the difficult times, but also brought a return of around HK$4 billion to the government. 
 
This came as the government wished to safeguard Hong Kong’s status as an international aviation hub after the epidemic in 2020 hit the global aviation industry unprecedentedly, including Cathay. 
  
Back in March, Cathay reported an attributable profit of HK$9.78 billion last year, after a net loss of HK$6.62 billion in 2022, according to its 2023 annual results. 

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