Cash-rich PAL buys back $143-M debt


Posted at May 13 2009 07:02 PM | Updated as of May 14 2009 09:31 PM

HONG KONG - Philippine Airlines is buying back its zero coupon notes and bilateral loans due in 2011 up to an aggregate principal amount of $143 million via its controlling shareholder Trustmark Holdings, it said in a filing on Wednesday.

The notes due in 2011, which have a total outstanding of $160 million, will be repurchased at between $50 and $58 via a dutch auction, including an early tender premium of $3. The loans, whose outstandings aggregate $60 million, will also be repurchased at the same rate and would also be made through dutch auction.

The notice said the payments made by the borrower towards the notes would be used by the holding company for future equity subscriptions. Trustmark owns 84 percent of Philippine Airlines.

Cash-rich Asian borrowers have been buying back their own bonds to improve financial ratios, after bond prices plummeted under the onslaught of forced liquidation, mainly by hedge funds.

The buybacks have been made through open market purchases or through tender offers such as the one Philippine Airlines is making.

Last week, ports to telecoms conglomerate Hutchison Whampoa, one of Asia's most prolific issuers, announced a $1.5 billion buyback of its bonds.