PAL seeks lower authorized capital stock to erase deficit

Flag carrier Philippines Airlines Inc. (PAL) has asked the Securities and Exchange Commission (SEC) to approve a decrease in authorized capital stock, while increasing the par value per share.

In a regulatory filing on Tuesday, the airline through parent PAL Holdings Inc. said it has filed an application to decrease its authorized capital stock to P13 billion from P20 billion.

This will decrease the par value per PAL share to P0.13 from P0.20.

Increasing the par value per share to P1.00 while reducing the amount of authorized capital stock to P13 billion will lower the number of shares of PAL, Diversified Securities Inc. Equities Trader Aniceto K. Pangan said.

"They must reduce the number of shares so that par value will be equal to P1.00," he said.

"The move to decrease authorized capital stock will allow the flag carrier to declare dividends and attract more investors," PAL said.

"The reduction is part of PAL's quasi-reorganization which, once effected, will eliminate the deficit which accumulated due to the company's losses prior to its recent three-year period of profitability," the airline noted.

In the same filing, PAL said it also requested for an increase the par value of its shares from P0.13 to P1.00 per share.

"As advised by counsel, the following applications of the corporation's subsidiary, Philippine Airlines Inc., have been filed with the Securities and Exchange Commission," the company said. — VDS, GMA News