Cebu Pacific says IPO's foreign tranche covered

Reuters

Posted at Oct 11 2010 05:36 PM | Updated as of Oct 12 2010 01:36 AM

MANILA, Philippines - The foreign tranche of the initial public offer of budget airline Cebu Air Inc. was covered more than 2 times on its opening day and a greenshoe option was likely to be exercised, a company official said.

The airline, a unit of conglomerate JG Summit Holdings Corp., plans to raise up to P23.3 billion ($534 million) by selling 186.6 million shares at P125 apiece, which would make it the country's biggest IPO in dollar terms.

Seventy percent of the shares were allocated to foreigners.

"It's more than 2 times oversubscribed," BJ Sebastian, senior vice president for corporate planning of JG Summit, said of the foreign tranche.

The airline was almost certain to use a greenshoe option to sell nearly 28 million more shares, Sebastian said, taking the entire sale to as much as P26.8 billion.

"There are pre-agreed triggers for the option," he said. "It is assumed that it will be taken up."

The sale of the domestic allocation of 30% of shares, including 10% for retail investors, starts on Tuesday and will run up to October 19. The shares will list on October 26.

Cebu Air is expected to benefit from a rally that has taken the main stock index to a series of record highs over the past month, with the market the second-best performer in Asia so far this year after Indonesia.

JG Summit will be selling nearly 160 million secondary shares and has said it would pay off some of its $600 million debts maturing between 2011 and 2013.

The airline plans to use its share of the proceeds to buy more aircraft from Airbus to better compete with Singapore's Tiger Airways and Malaysia's AirAsia.

Citigroup, Deutsche Bank and JP Morgan are joint global lead managers for the share sale, and ATR KimEng Capital Partners is the local lead underwriter.