Swire Pacific Slashes Cathay Stake to 39.15% in HK$4.8bn Sale

Swire Pacific sold 362.65 million shares in Cathay Pacific Airways at HK$13.20 each on Wednesday, a 7.7% discount to Tuesday's closing price of HK$14.30, cutting its stake in the Hong Kong flag carrier to 39.15% from roughly 45.1%.

The placement raised gross proceeds of about HK$4.79 billion. Swire Pacific (0019) used the sale alongside a repurchase of HK$4.69 billion of its own exchangeable bonds, retiring most of the debt it issued in June to fund the transaction, according to Investing.com, which cited the company's disclosure.

The move completes a process Swire began three months ago. In June, its finance subsidiary issued HK$4.7 billion in zero-coupon bonds exchangeable into Cathay Pacific (0293) shares at HK$13.18 apiece, warning at the time that full conversion would cut its Cathay stake by 5.9 percentage points, from 45.1% to 39.2%. Wednesday's figures landed almost exactly there.

Cathay Pacific shares fell 1.9% to HK$13.78 in Wednesday trading. The stock had already come under pressure from a broader Hong Kong sell-off, with the Hang Seng Index down for a third straight session as renewed U.S.-Iran military tensions pushed Brent crude above $95 a barrel.

Swire Pacific said it has no intention of proposing changes to Cathay's governance or management following the reduced stake, and that it remains committed to holding a substantial long-term position in the airline. It stays Cathay's largest shareholder, ahead of Air China.

The transaction leaves only a small remainder of the June bond issue outstanding. Swire has not indicated whether it plans further sales of its Cathay holding.