Cathay Pacific given extension to draw down $1 bln govt loan

Cathay Pacific Airways Ltd (0293.HK) said on Tuesday that the Hong Kong government had agreed to extend the drawdown period for a HK$7.8 billion ($1.01 billion) loan facility by a year to June 2022, giving it more flexibility to manage liquidity.

The bridge loan was part of a $5 billion rescue package led by the Hong Kong government and Cathay’s major shareholders Swire Pacific Ltd (0019.HK) and Air China Ltd (601111.SS) last year to help the airline weather the COVID-19 crisis.

Cathay Chief Executive Augustus Tang said in a statement the airline had not yet drawn down on the loan as it adopted a suite of measures to save cash, but the extension would give it more flexibility to manage its liquidity position.

Cathay had HK$28 billion of liquidity as of December 2020 and also raised HK$6.74 billion from a convertible bond issue in February and $650 million in a bond issue last month.

The airline’s move to access as much liquidity as possible at a time when passenger numbers are down by more than 99% from 2019 levels follows a decision by rival Singapore Airlines Ltd (SIAL.SI) last month to issue S$6.2 billion ($4.69 billion) of convertible bonds.

The Singapore Airlines convertible bonds, underwritten by majority shareholder Temasek Holdings (TEM.UL), were an optional part of a state investor-led S$15 billion rescue package announced last year.

Both airlines lack domestic markets at a time when international borders are still largely shut.

($1 = 7.7591 Hong Kong dollars)

($1 = 1.3224 Singapore dollars)

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Source: https://www.reuters.com/business/aerospace-defense/cathay-pacific-given-extension-draw-down-1-bln-govt-loan-2021-06-08/