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Airline prepares US$570m share sale to cut debts
Source: Bloomberg News |
September 12, 2012, Wednesday
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Print Edition
Print Edition
CHINA Eastern Airlines Corp, the nation's second-largest carrier by passenger numbers, plans to raise US$570 million selling shares to its state-owned parent to pare debts.
The sale will comprise 698.9 million Shanghai-listed shares priced at 3.28 yuan (52 US cents) apiece and 698.9 million Hong Kong-listed shares costing HK$2.32 (30 US cents) each, the Shanghai-based airline said in a stock exchange filing yesterday. That's in line with the last traded prices for both stocks.
The carrier joins Air China Ltd and China Southern Airlines Co in getting financial support from its parent as the government helps the industry contend with slower traffic growth and an end to gains from a currency rise. The nation's big three carriers saw lower profits in the first half.
"The capital injection will give some relief to China Eastern's stretched balance sheet," said Davin Chunpong Wu, a transport analyst at Credit Suisse Group AG in Hong Kong. "This sort of support will continue as the government encourages the highly regulated airline industry to expand into less-profitable new markets such as western China."
China Eastern will raise 2.29 billion yuan from the Shanghai stock sale and HK$1.62 billion in the Hong Kong offering, it said. The funds will be used to repay bank and financial institution as well as for boosting working capital.
The airline's long-term debt is 1.9 times total equity, higher than Air China's 1.2 times and China Southern's 1.1 times, according to data compiled by Bloomberg News.
Its first-half profit fell 65 percent, the smallest drop among the nation's big three airlines, to 806.9 million yuan.
The sale will comprise 698.9 million Shanghai-listed shares priced at 3.28 yuan (52 US cents) apiece and 698.9 million Hong Kong-listed shares costing HK$2.32 (30 US cents) each, the Shanghai-based airline said in a stock exchange filing yesterday. That's in line with the last traded prices for both stocks.
The carrier joins Air China Ltd and China Southern Airlines Co in getting financial support from its parent as the government helps the industry contend with slower traffic growth and an end to gains from a currency rise. The nation's big three carriers saw lower profits in the first half.
"The capital injection will give some relief to China Eastern's stretched balance sheet," said Davin Chunpong Wu, a transport analyst at Credit Suisse Group AG in Hong Kong. "This sort of support will continue as the government encourages the highly regulated airline industry to expand into less-profitable new markets such as western China."
China Eastern will raise 2.29 billion yuan from the Shanghai stock sale and HK$1.62 billion in the Hong Kong offering, it said. The funds will be used to repay bank and financial institution as well as for boosting working capital.
The airline's long-term debt is 1.9 times total equity, higher than Air China's 1.2 times and China Southern's 1.1 times, according to data compiled by Bloomberg News.
Its first-half profit fell 65 percent, the smallest drop among the nation's big three airlines, to 806.9 million yuan.
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