Govt To Invest In Cathay Pacific

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The Government will invest in Cathay Pacific Airways to protect Hong Kong’s role as a leading international aviation hub in the region as well as the city’s long-term economic development, Financial Secretary Paul Chan said today.

Speaking to reporters this afternoon, Mr Chan noted that governments around the world have provided different forms of support to major airlines in the face of COVID-19.

The Financial Secretary explained that the Government will invest about $27.3 billion in Cathay Pacific, comprising preference shares with detachable warrants of around $19.5 billion and a bridging loan of about $7.8 billion.

The government investment in Cathay Pacific, to be made through the Land Fund, will also generate a reasonable return for the Government, he pointed out.

“Based on the assessment of the external financial consultant engaged by the Monetary Authority, the projected return of this investment, in terms of internal rate of return, is expected to range from 4% to 7.5%, higher than the six-year moving average of 3.7% of the investment portfolio of the Exchange Fund.

“To safeguard the best interest of the Government, we will appoint two observers to the Cathay Group’s Board of Directors until the Cathay Group redeems all preference shares from the Government and repays the Government in full the bridging loan with related interests.”