CEBU AIR, Inc. (CEB), the publicly listed operator of Cebu Pacific, is increasing its equity stake in 1Aviation Groundhandling Services, Corp. (1AV), a company specializing in ground handling and logistical support services.
Cebu Air has executed a deed-of-assignment and subscription agreement to acquire 1.13 million shares of 1AV at a price of P100 per share, amounting to a total investment of P113 million, the company said in a regulatory filing on Tuesday.
Under this debt-to-equity conversion deal, Cebu Air said a portion of its loans and advances will be converted into 1AV equity by the issuance of an equivalent number of common stocks, pending the approval from the Securities and Exchange Commission.
This debt-to-equity plan will increase Cebu Air’s ownership in 1AV to 60% from the current 40%, making it the majority owner of the company.
As 1AV’s majority owner, Cebu Air will be able to integrate 1AV’s services more seamlessly into its operations, while also reducing operational costs and improving service quality, especially in ground handling and logistical support, it said.
1AV also stands to benefit from the transaction by reducing its debt and improving its overall financial health, Cebu Air said.
Founded in 2018, 1AV operates in 34 airports nationwide and plans to expand further to serve major domestic and international airlines.
To recall, Cebu Air had sold its majority stake in ground-handling service subsidiary 1AV to Philippine Airport Ground Support Solutions, Inc. (PAGSS), led by Jefferson G. Cheng.
Cebu Air said PAGSS and Mr. Cheng both agreed to convert their outstanding loans in 1AV, amounting to P34.23 million and P2.78 million, respectively, or a total of P37 million, into equity through the issuance of 370,000 common shares.
With this, PAGSS and Mr. Cheng remain minority owners of 1AV, collectively owning 40% of its stake.
PAGSS is a ground-handling service company based at Ninoy Aquino International Airport (NAIA).
At the stock exchange on Tuesday, shares in Cebu Air closed 65 centavos, or 1.98% lower, at P32.25 apiece. — Ashley Erika O. Jose
