Swire Pacific Limited (Swire Pacific) announced that its wholly-owned subsidiary, Swire Pacific Finance, has signed a subscription agreement with J.P. Morgan, Morgan Stanley and HSBC to issue zero-coupon guaranteed exchangeable bonds with an aggregate principal of HK$4.70 billion. The bonds, guaranteed by Swire Pacific, are targeted to settle on 16 June 2026 and mature on 16 June 2027.
The instruments are exchangeable at an initial price of HK$13.18 per Cathay Pacific Airways share, allowing full conversion into 356.60 million Cathay Pacific shares—equivalent to approximately 5.9% of the airline’s issued share capital as of the announcement date. The initial exchange price represents premiums of 2.9% over the 9 June 2026 close, 2.2% over the five-day average, and 1.5% over the ten-day average closing prices of Cathay Pacific shares.
Key bond features • Format: Registered, unsecured, unsubordinated; denomination of HK$2.00 million each, in multiples of HK$1.00 million thereafter. • Coupon: Zero; issued at 100.125% of par. • Exchange period: From the 41st day post-issue until 30 trading days before maturity (earlier in certain redemption scenarios). • Redemption: – Final redemption at par on maturity unless previously exchanged or redeemed. – Swire Pacific Finance may redeem early for tax reasons, when Cathay Pacific’s share price trades ≥120% of the then-effective exchange price for 20 out of 30 consecutive trading days, or when ≥90% of the bonds have been exchanged or cancelled. – Bondholders may require redemption at par upon specified change-of-control or delisting events involving Swire Pacific, Swire Pacific Finance, or Cathay Pacific. • Listing: Application to list on the Vienna MTF (VSE).
Concurrent with the bond issue, Swire Pacific has entered into a securities-lending agreement with HSBC covering up to 354.98 million Cathay Pacific shares to facilitate settlement of exchange obligations. Waivers for an existing 180-day placing lock-up have been obtained from J.P. Morgan and Morgan Stanley.
Net proceeds, estimated at HK$4.65 billion after expenses, are earmarked for general working-capital purposes. Swire Pacific states that the transaction strengthens liquidity while preserving a significant long-term stake in Cathay Pacific.
Under Hong Kong Listing Rules, the grant of exchange rights constitutes a deemed disposal of assets; with the highest applicable percentage ratio exceeding 5% but below 25%, the deal is classified as a discloseable transaction requiring announcement but not shareholder approval.
Cathay Pacific’s audited results show profit after tax of HK$9.89 billion in 2024 and HK$10.83 billion in 2025, with consolidated net assets of HK$60.12 billion at 31 December 2025.
Completion remains subject to customary conditions precedent, including legal opinions, regulatory approvals and rating confirmations. The managers retain discretion to waive certain conditions, and the bond issuance may be terminated under specified circumstances. Swire Pacific advises shareholders and potential investors to exercise caution when dealing in the securities of both Swire Pacific and Cathay Pacific.
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