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C O V E R S H E C O V E R S H E E T AUDITED FINANCIAL STATEMENTS SEC Registration Number P W – 9 4 C O M P A N Y N A M E P A L H O L D I N G S , I N C . ( A S u b s i d i a r y o f T r u s t m a r k H o l d i n g s C o r p o r a t i o n ) PRINCIPAL OFFICE ( No. / Street / Barangay / City / Town / Province ) 8 t h F l o o r , P N B F i n a n c i a l C e n t e r , P r e s i d e n t D i o s d a d o M a c a p a g a l A v e . , C C P C o m p l e x P a s a y C i t y Form Type Department requiring the report Secondary License Type, If Applicable 1 7 - A C R M D N / A C O M P A N Y I N F O R M A T I O N Company’s Email Address Company’s Telephone Number Mobile Number [email protected] (02) 816-3451 N/A No. of Stockholders Annual Meeting (Month / Day) Fiscal Year (Month / Day) 6,507 Last Thursday of May 12/31 CONTACT PERSON INFORMATION The designated contact person MUST be an Officer of the Corporation Name of Contact Person Email Address Telephone Number/s Mobile Number Susan T. Lee [email protected] (02) 816-3451 N/A CONTACT PERSON’s ADDRESS 7/F Allied Bank Center, 6754 Ayala Avenue, Makati City NOTE 1 : In case of death, resignation or cessation of office of the officer designated as contact person, such incident shall be reported to the Commission within thirty (30) calendar days from the occurrence thereof with information and complete contact details of the new contact person designated. 2 : All Boxes must be properly and completely filled-up. Failure to do so shall cause the delay in updating the corporation’s records with the Commission and/or non-receipt of Notice of Deficiencies. Further, non-receipt of Notice of Deficiencies shall not excuse the corporation from liability for its deficiencies. - 1 - SECURITIES AND EXCHANGE COMMISSION SEC FORM 17-A ANNUAL REPORT PURSUANT TO SECTION 17 OF THE SECURITIES REGULATION CODE AND SECTION 141 OF THE CORPORATION CODE OF THE PHILIPPINES 1. For the calendar year ended December 31, 2017 2. SEC Identification Number PW- 94 3. BIR Tax Identification No. 000-707-922 4. Exact name of registration as specified in its charter PAL HOLDINGS, INC. 5. Philippines 6. (SEC Use Only) (Province, country or other jurisdiction of Industry Classification Code: incorporation or organization) 7. 8th Floor, PNB Financial Center, President Diosdado Macapagal Ave., 1307 CCP Complex, Pasay City Address of principal office Postal Code 8. (632) 816-3451 Registrant’s telephone number, including area code 9. Not Applicable Former name, former address, former fiscal year, if changed since last report 10. Securities registered pursuant to Section 8 and 12 of the SRC Number of Shares of Common Stock Title of Each Class Outstanding and Amount of Debt Outstanding Common Stock 11,610,231,157 shares - 2 - 11. Are any or all of these securities listed on the Philippine Stock Exchange? Yes [ ] No [ ] Philippine Stock Exchange Common Stock – 10,089,705,458 shares 12. Check whether the registrant: (a) has filed all reports to be filed by Section 17 of the SRC and SRC Rule 17.1 thereunder or Section 11 of the Revised Securities Act (RSA) and RSA Rule 11 (a)-1 thereunder, and Sections 26 and 141 of the Corporation Code of the Philippines during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); Yes [ ] No [ ] (b) has been subject to such filing requirements for the past 90 days. Yes [ ] No [ ] 13. As of December 31, 2017, the aggregate market value of the voting stock held by non-affiliates of the registrant is P=6,170,961,050. 14. Not Applicable DOCUMENTS INCORPORATED BY REFERENCE PART I - BUSINESS AND GENERAL INFORMATION Item 1. Business a) Corporate History PAL Holdings, Inc., (PHI, or the Company), was incorporated on May 10, 1930 as “Baguio Gold Mining Company”. On September 23, 1996, the Philippine Securities and Exchange Commission (SEC) approved the change in the Company’s name to “Baguio Gold Holdings Corporation” and the change in its primary purpose to that of a holding company. On May 30, 1997, the stockholders approved the increase in the Company’s authorized capital stock from 200.00 million common shares to 4.00 billion common shares both at P=1 par value per share. On April 13, 1998, the stockholders amended the increase in the Company’s authorized capital stock from 4.00 billion common shares to 2.80 billion common shares and 1.20 billion preferred shares both at P=1 par value per share. On August 30, 1999, the stockholders further amended the authorized capital stock from 2.80 billion common shares and 1.20 billion preferred shares to 400.00 million common shares at P=1 par value per share this which was approved by the SEC on October 2, 2000. On July 26, 2006 and September 19, 2006, at separate meetings, the Board of Directors (BOD) and the stockholders approved the increase in authorized capital stock of the Company from P=400.0 million divided into 400.0 million common shares with a par value of P=1 per share to P=20.0 billion divided into 20.0 billion common shares. On August 17, 2006, the BOD approved the acquisition of the following holding companies which collectively control 84.67% of Philippine Airlines, Inc. (PAL, or the Airline); Pol Holdings, Inc., Cube Factor Holdings, Inc., Ascot Holdings, Incorporated, Sierra Holdings & Equities, Inc., Network Holdings & Equities, Inc., and Maxell Holdings Corporation (collectively, the Six Holding Companies). On January 19, 2007 the Philippine SEC approved the increase in authorized capital stock and change in corporate name of Baguio Gold Holdings Corporation to PAL Holdings, Inc. On August 13, 2007, the Company acquired directly from the Six Holding Companies 8,823,640,223 shares in PAL, which is equivalent to 81.57% of the issued and outstanding common shares in the Airline. At the same time, it acquired from the Six Holding Companies except Maxell Holdings Corporation 50,591,155 shares in PR Holdings, Inc. (PR), equivalent to 82.33% of the outstanding shares in PR. Both acquisitions were made by way of dacion en pago, whereby the total acquisition price of P=12.55 billion for the shares in PAL and PR was satisfied by an equivalent reduction of the liability owing to the Company from the Six Holding Companies. On August 14, 2007, the Company assigned its shares in each of the Six Holding Companies to Trustmark Holdings Corporation (Trustmark). On October 16, 2007, the Philippine SEC approved the Amended By-Laws of the Company, which consist of the deletion of outdated provisions and the inclusion of the provisions required under the Code of Corporate Governance provided by the Philippine SEC. On October 17, 2007, the Philippine SEC approved the equity restructuring of the Company. This allowed the Company to wipe out the deficit as of March 31, 2007 amounting to P=253.73 million using the Additional Paid-In Capital amounting to P=4.03 billion subject to the condition that the - 4 - remaining additional paid-in capital will not be used to wipe out losses that may be incurred in the future without prior approval of the Philippine SEC. In April 2012, San Miguel Equity Investments Inc. (SMEII), a wholly owned subsidiary of San Miguel Corporation, acquired 49% equity interest in Trustmark. Trustmark then owns 97.71% of the Company, which in turn beneficially owns (directly and indirectly, thru PR) 84.67% of PAL. In May and June 2012, the proceeds from the investment of SMEII to Trustmark flowed down to PAL with the subscription by Trustmark of 17.00 billion shares in the Company for P=17.00 billion and subsequently, the subscription by the Company of 85 billion shares in PAL for P=17.00 billion. On June 26 and September 28, 2012, the BOD, by majority vote, and the stockholders representing at least 2/3 of the outstanding capital stock, approved the increase in authorized capital stock from P=20.0 billion divided into 20.00 billion shares with P=1 par value per share to P=23.00 billion divided into 23.00 billion shares with P=1 par value per share. Out of the increase in the authorized capital stock, P=2.42 billion have been subscribed and fully paid by way of cash infusion by Trustmark. Accordingly, as a result of the infusion, Trustmark’s ownership in the Company increased from 97.71% to 99.45%. The increase in authorized capital stock was approved by the Philippine SEC on December 12, 2012. On February 4 and March 15, 2013, the BOD, by majority vote, and the stockholders representing at least 2/3 of the outstanding capital stock, approved the increase in authorized capital stock from P=23.00 billion divided into 23.00 billion shares with P=1 par value per share to P=30.00 billion divided into 30.00 billion shares with P=1 par value per share. The increase in authorized capital stock was approved by the Philippine SEC on June 28, 2013.
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