Swire Pacific Announces Discloseable Transaction: Placing of Cathay Pacific Shares

Key Points of the Announcement

• Transaction: Swire Pacific Limited has entered into a placing agreement to sell 153,059,000 shares in Cathay Pacific Airways Limited at HK\$11.74 per share.
• Placing Agents: The transaction is facilitated by J.P. Morgan and Morgan Stanley.
• Size and Impact: The Sale Shares represent approximately 2.52% of the total issued shares of Cathay Pacific (excluding treasury shares).
• Gross Proceeds: The transaction will generate net proceeds of approximately HK\$1,789 million for Swire Pacific.
• Pricing: The placing price represents a discount of 9.6% to the closing price on the agreement date (12 March 2026), and discounts of 8.0% and 9.8% to the average closing prices over the past 5 and 10 trading days, respectively.
• Financial Impact: Swire Pacific expects to record a gain of approximately HK\$365 million from the transaction, subject to audit and final review.
• Shareholding After Placing: Swire Pacific’s interest in Cathay Pacific will decrease from approximately 47.64% to 45.12% (excluding treasury shares), returning to its historical shareholding level prior to Cathay’s off-market share buyback from Qatar Airways.
• Use of Proceeds: The funds will be used for general working capital purposes.
• Listing Rules: The transaction is classified as a “discloseable transaction” under Chapter 14 of the Hong Kong Listing Rules, meaning it requires public reporting and announcement but not shareholder approval.
• Lock-Up Period: Swire Pacific and its subsidiaries are restricted from selling additional Cathay Pacific shares or derivatives for 180 days after the closing date without the Placing Agents’ consent.
• Conditionality: The placing is subject to several conditions, including no material market disruptions and no suspension of Cathay Pacific shares, and may be terminated under certain circumstances.

Details and Analysis for Investors

On 12 March 2026, Swire Pacific Limited, a leading Hong Kong-based conglomerate, announced that it has entered into a placing agreement with J.P. Morgan and Morgan Stanley as placing agents to dispose of 153,059,000 shares in Cathay Pacific Airways Limited. The transaction price is set at HK\$11.74 per share, representing a significant discount to recent trading levels. This block of shares amounts to approximately 2.52% of Cathay Pacific’s current issued share capital (excluding treasury shares).

This transaction is highly relevant for investors because:

• It involves a large, strategic shareholder reducing its stake, which may be perceived as moderating its exposure to Cathay Pacific, though Swire Pacific explicitly states confidence in the airline’s prospects and remains its largest shareholder.
• The share sale will return Swire Pacific’s holding to its pre-Qatar Airways buyback level, which may be seen as a normalization after a significant market event.
• The placing price is at a notable discount to the market, which could temporarily pressure Cathay Pacific’s share price due to short-term supply and perceptions of value.
• The lock-up agreement assures the market that Swire Pacific will not further reduce its stake for at least six months, providing some stability.
• The transaction strengthens Swire Pacific’s balance sheet and working capital, giving it greater financial flexibility for future business opportunities or to weather market uncertainties.

Financial Details

• Net proceeds: HK\$1,789 million (after fees and expenses).
• Expected gain: HK\$365 million, subject to audit.
• Previous and future shareholding in Cathay Pacific:
  • Before placing: 47.64% (excluding treasury shares).
  • After placing: 45.12% (assuming no other changes in outstanding shares).
• Lock-up: 180 days post-closing. No further sales or similar transactions without agents’ consent.

Conditions Precedent and Risks

Completion of the placing is conditional on several factors, including:

• No breach of Swire Pacific’s representations or warranties.
• No material market disruptions, suspensions, or force majeure events.
• Continued trading of Cathay Pacific shares on the Stock Exchange.

The placing can be terminated if these conditions are not satisfied or waived. Accordingly, there is a risk the transaction may not proceed as planned.

Background on Cathay Pacific Airways

• Cathay Pacific is a leading airline group based in Hong Kong, with diversified activities in airline operations, catering, ground handling, cargo terminals, and loyalty programs.
• In the years ended 31 December 2024 and 2025, Cathay Pacific reported strong performance:
  • 2024: Profit before tax HK\$11,203 million; Profit after tax HK\$9,888 million.
  • 2025: Profit before tax HK\$12,310 million; Profit after tax HK\$10,828 million.
  • Net assets as of 31 December 2025: HK\$60,117 million.

Board of Directors and Governance

The board of Swire Pacific is led by Chairman Guy Bradley, with a mix of executive, non-executive, and independent non-executive directors, ensuring a diverse oversight of the company’s strategic direction.

Investor Implications and Price Sensitivity

• This share placing is a significant capital markets event, which may impact both Swire Pacific and Cathay Pacific’s share prices in the near term.
• Investors should note the large size of the placing, the pricing discount, and the impact on Swire Pacific’s cash position and shareholding in Cathay Pacific.
• The lock-up period and Swire Pacific’s stated continued commitment to Cathay Pacific may provide some reassurance to the market.
• Potential investors and shareholders are advised to monitor how the market absorbs the new supply of shares and the company’s future capital allocation plans.

Disclaimer

Disclaimer: The above information is provided for informational purposes only and does not constitute investment advice or a recommendation to buy or sell any securities. Shareholders and potential investors are advised to exercise caution when dealing in the securities of Swire Pacific Limited and Cathay Pacific Airways Limited. The placing is subject to various conditions and may not be completed as planned. Please consult your financial adviser before making any investment decisions.

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