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Cebu Air postpones IPO indefinitely due to market volatility


Tags :Loyalty & Other, CEBU Pacific Air


Cebu Air postpones IPO indefinitely due to market volatility
(XFN-ASIA): Cebu Air Inc, operator of Philippine-based budget airline Cebu Pacific, said Tuesday it has postponed its initial public offering indefinitely to avoid the current turmoil in the stock markets.

 

Cebu Air, owned by conglomerate JG Summit Holdings Inc, was to sell up to 135.5 million shares and was looking at a maximum offer price of 95 pesos per share. UBS AG has been tapped as the sole international underwriter and bookrunner.

 

Jittery investors dumped stocks Tuesday in a global sell-off amid growing fears of a global economic slowdown as the US appeared headed toward a recession. The Philippines' 30-company composite index finished trading down 173.89 points or 5.5 percent at 2,978.41, its sharpest single-day fall in five months. The benchmark index stretched its decline into the seventh session in a row, its longest losing streak since August last year.

 

"Cebu Air, in consultation with JG Summit and UBS, has decided to postpone its initial public offering until further notice, given the extreme volatility in global equity markets," Cebu Air told the Philippine Stock Exchange."Despite positive feedback regarding the company from international and domestic investors during the management roadshow, the time and execution of the IPO has been overtaken by global economic concerns," it said.


Up to 94.8 million shares or 70% of the offer were to be made available to foreign investors, with the remaining 30% allotted to local investors. Cebu Air was supposed to list on the local bourse on February 8 after the IPO. The share offer plan had been expected to raise 6.6 billion pesos for the company and 5.8 billion pesos for the selling shareholders, including JG Summit.
Cebu Air planned to use the proceeds to fund its re-fleeting program, replenish its working capital, as well as serve its other general corporate purposes.

 

But Cebu Air said its expansion plans are "not at risk as a result of this postponement in its listing. The company has every intention of returning to the public markets once market conditions permit".

 

JG Summit holds the interests of local tycoon John Gokongwei in the airline, food, textile, petrochemical, telecommunications, shopping malls, hotels and real estate businesses. JG Summit shares tumbled 80 centavos or 7.6% to close at 9.70 pesos on Tuesday.

 

Date posted: 23-Jan-08. 

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