Friday 30 August 2024 Cathay Pacific Airways Limited (Cathay) today announces it has entered into an agreement to buy back all of the warrants it had issued to the Hong Kong SAR (HKSAR) Government. Under the agreement, Cathay will buy back the warrants for a total consideration of at least HK$1,531,828,439.28 (the exact amount of which is subject to the share price movement in a certain period between signing and completion).

Completion of the buyback is expected to take place on the tenth business day after the date of the agreement, after which the warrants will be cancelled. The buyback will eliminate the possibility of dilution of Cathay shares for our shareholders.

The terms of the buyback were agreed after arm’s length negotiations, and are considered to be fair and reasonable for Cathay and its shareholders as a whole. Cathay intends to fund the buyback of the warrants from its existing sources of finance, which will not impact the commitment to its investment plans.

The warrants were issued to the HKSAR Government as part of Cathay’s HK$39 billion recapitalisation in 2020, which comprised three tranches:

• The issuance of HK$19.5 billion preference shares with warrants to the HKSAR Government.
• An HK$11.7 billion rights issue of ordinary shares to existing shareholders.
• A HK$7.8 billion bridge loan facility provided by the HKSAR Government, which was not utilised and expired on 8 June 2023.

Chief Executive Officer Ronald Lam said: “Cathay’s recapitalisation in 2020 was essential to ensuring we sustained our operations amid the industry downturn caused by the global pandemic, while continuing our commitments to Hong Kong as an international aviation hub. Our strong financial results for the first half of 2024 give us the confidence to buy back the warrants. As we close this chapter in our history, I would like to extend my sincere gratitude to the Hong Kong SAR Government and to all our shareholders for their invaluable support.”

Last month, Cathay bought back all the remaining preference shares from the HKSAR Government. It has also paid a total of HK$2.44 billion in preference share dividends to the HKSAR Government over its holding period.