Philippine Airlines (PR, Manila Ninoy Aquino International) owner PAL Holdings announced in a Philippine Stock Exchange (PSE) disclosure on February 27 that its board of directors had approved that morning an exchange ratio of 15.57 of its shares to one share in Philippine Airlines for a planned equity swap.

The holding company explained that “as part of PAL’s Chapter 11 restructuring, part of the debts of the unsecured creditors were impaired and converted into equity of PAL. These impaired creditors now own approximately 20.1% of PAL.”

PAL Holdings exited Chapter 11 in New York in early January 2022 and returned to the stock exchange by the end of March.

Under its company reorganisation plan, PAL Holdings offered the impaired creditors “a mechanism” to swap their PAL shares into those of Philippine Airlines “so that they would have the ability to trade them on the PSE.”

PAL Holdings said it had commissioned an independent appraiser, FTI Consulting Philippines, to make a valuation of the two companies and “render a fairness opinion on the share swap ratio.” Using high and low estimates of the company’s value, FTI concluded that a fair ratio would be in the range of 14.4261 and 16.7987, so 15.57 was agreed on.

At the close of trading on the last day of February, PAL Holdings shares were little changed since November 2022, at PHP5.72 Philippine pesos (USD0.1033).