Holdings firm set to prepay PAL notes, debt

Philippine Daily Inquirer
By Riza T. Olchondra
May 14, 2009

MANILA, Philippines—Philippine Airlines unsecured zero coupon notes and bilateral loans due in 2011 are set to be prepaid through the controlling shareholder of its parent company, PAL Holdings Inc.

In a disclosure to the Philippine Stock Exchange, PAL Holdings said its controlling shareholder, Trustmark Holdings Corp., “proposes to buy a combination of notes and other [debts] up to an aggregate principal amount of $143 million, at its sole discretion.”

The buyback will be undertaken through a so-called Dutch auction, or an open descending price auction.

The aggregate principal amount of notes and loans combined is about $220 million.

The early tender is set on May 19. Those who will tender their notes by this time will receive their purchase price plus an early tender premium.

The offer expires on May 22 at 4 p.m. (GMT). The transaction is expected to be settled on May 29, PAL Holdings said.

JP Morgan Securities Ltd. is the sole dealer and manager of this transaction.

As part of the transaction, Trustmark will become the beneficial owner of the purchased notes and other debts.

PAL Holdings said that Trustmark would use the proceeds for future equity subscriptions.

Trustmark is controlled by PAL chair Lucio Tan.

It is the primary shareholder of PAL Holdings Inc. which, in turn, owns 84 percent of the issued share capital of the flag carrier.