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Philippine low-cost carrier defers IPO due to election jitters
Philippine budget airline Cebu Air Inc. has deferred an initial public offering worth as much as 25.7 billion peso (1$=47 peso) from its original schedule of April, the Philippine Daily Inquirer reported.
Cebu Air has “taken the view that, despite strong interest in the IPO at this time, it is in the better interests of the stakeholders to pursue the listing after the coming elections,” the airline said in a March 30 letter to the Philippine Stock Exchange.
Earlier approved by the PSE and the Securities and Exchange Commission for offering by Cebu Air to the investing public at a target price not exceeding 95 peso each are 125.25 million primary shares and 110.31 million secondary shares. The offering can be upsized by up to 35.33 million in case of strong demand.
Based on the previous schedule, Cebu Air was supposed to start the domestic right after the Lenten break on April 5 and set the final offer price and size on April 16. The listing date, which will allow the trading of the company’s shares under the ticker “CEB,” was originally set for May 3.
Bach Johann Sebastian, vice president for finance of Cebu Air’s parent firm JG Summit, said the new schedule for the airline’s IPO and listing on the PSE would depend on how peaceful the elections would turn out.
“There is always some volatility expected when there are elections in the country. It’s not out of the ordinary,” Sebastian said in an interview. “There is just some concern regarding the market right now,” he said, noting that the company had chosen not to risk its historic listing being affected by the May polls.
He said the company would continue to operate normally, noting that the capital the airline had wanted to raise through an IPO was merely meant to strengthen its balance sheet.
The IPO of the operator of Cebu Pacific airlines is the biggest public offering planned in the local bourse in five years. Still holding the record as the largest IPO is tycoon Henry Sy’s flagship SM Investments Corp., which raised P28.75-billion from its stock market debut in March 2005.
The decision to defer the IPO has drawn mixed reactions from the stock market.
After Cebu Air’s IPO, at least 32 percent to as much as 37 percent of Cebu Air’s common shares will be held by the public, excluding the shares earmarked for company employees. A total of 728.22 million common shares will be listed on the stock exchange.
Of the total offering, excluding the over-allotment option, 70 percent or up to 164.89 million common shares are expected to be distributed to overseas investors while the remaining 30 percent or up to 70.67 million shares will be sold to local investors.
Deutsche Bank AG and J.P. Morgan Ltd. are acting as international issue managers for this IPO while ATR KimEng Capital Partners Inc. is the domestic underwriter.