Clifford Chance

Clifford Chance advises on Cathay Pacific's recapitalisation plan

Leading international law firm Clifford Chance is advising as one of the principal counsels across all three investment tranches on a proposed US$5 billion recapitalisation plan announced by Cathay Pacific Airways Limited. The recapitalisation plan involves a proposed US$2.5 billion issue of preference shares with detachable warrants; a proposed US$1.5 billion rights issue; and a proposed US$1 billion bridge loan facility.

The recapitalisation plan is aimed to provide liquidity and to strengthen the capital of Cathay Pacific in light of the COVID-19 pandemic and the challenges which the airline industry is facing due to the widespread travel restrictions imposed by many countries.

The proposed preference share issue with warrants, and the proposed rights issue will require the approval of the shareholders of Cathay Pacific. Swire Pacific Limited, Air China Limited and Qatar Airways Group Q.C.S.C., being the three largest shareholders of Cathay Pacific, have given irrevocable undertakings to vote in favour of the recapitalisation plan (where not restricted by the Listing Rules) and to subscribe for their pro-rata share of the rights issue.

Aviation 2020 Limited will be the provider of the bridge loan facility, and, upon completion of the rights issue, Aviation 2020 Limited will subscribe in full for the preference shares. Aviation 2020 Limited is wholly-owned by the Financial Secretary Incorporated as established under the Financial Secretary Incorporation Ordinance.

The Clifford Chance team is led by partners Amy Lo (Corporate/Public Companies), Anthony Wang (Finance), Matt Fairclough (Debt Capital Markets) and Virginia Lee (Corporate/Public Companies). They are supported by partner Paul Greenwell (Asset Finance), counsel Liao Yufei (Corporate/Public Companies), associates Jeffery Hung (Debt Capital Markets), Chit Kwong (Finance), Jeff Wong (Corporate/Public Companies), and Hetty Lam (Asset Finance).

Amy said, "The transaction showcases Clifford Chance's capability in high-value complex recapitalisations, bringing together its market leading teams to advise across the three investment tranches from the public companies, equity and debt capital markets, finance and asset finance fields."