China Southern plans to raise US$1.57b
By Winny Wang |
March 10, 2010, Wednesday
|
Print Edition
Print Edition
CHINA Southern Airlines plans to raise up to 10.75 billion yuan (US$1.57 billion) through private placement to repay bank loans and replenish working capital.
The country's largest carrier will issue up to 1.77 billion yuan-denominated shares at 5.66 yuan each to 10 institutions, including its parent, China Southern Air Holding Company, it said in a statement to the Shanghai Stock Exchange on Monday.
It will also sell up to 312.5 million Hong Kong-listed shares at HK$2.73 (35 US cents) each to Nan Lung Holding Ltd, a wholly owned subsidiary of the parent.
"The board believes that the subscription can facilitate the company to reasonably allocate and fully utilize their existing assets as well as leverage the complementary advantages of various resources, lighten the debt burden of the company, and enhance the overall benefits," the Guangzhou-based carrier said.
Its parent will hold 51.5 percent of China Southern after the share sales, diluted from the previous 59 percent.
"The issue price is reasonable and the share placement is expected to be completed by the end of August," said Haitong Securities Co.
Domestic carriers face increasing competition from new bullet train services in China, especially China Southern which runs more domestic routes than other airlines.
"We have carried out measures, such as optimizing flight network and adjusting flights, to improve our profitability, but the high debt ratio hindered our development," the carrier said. The debt ratio will be reduced to 74.12 percent from 85.73 percent after the injection.
"The cash injection will help China Southern improve capital structure, reduce debt ratio and enhance its anti-risk ability," said Ma Xiaoli, a CITIC Securities Co analyst.
The country's largest carrier will issue up to 1.77 billion yuan-denominated shares at 5.66 yuan each to 10 institutions, including its parent, China Southern Air Holding Company, it said in a statement to the Shanghai Stock Exchange on Monday.
It will also sell up to 312.5 million Hong Kong-listed shares at HK$2.73 (35 US cents) each to Nan Lung Holding Ltd, a wholly owned subsidiary of the parent.
"The board believes that the subscription can facilitate the company to reasonably allocate and fully utilize their existing assets as well as leverage the complementary advantages of various resources, lighten the debt burden of the company, and enhance the overall benefits," the Guangzhou-based carrier said.
Its parent will hold 51.5 percent of China Southern after the share sales, diluted from the previous 59 percent.
"The issue price is reasonable and the share placement is expected to be completed by the end of August," said Haitong Securities Co.
Domestic carriers face increasing competition from new bullet train services in China, especially China Southern which runs more domestic routes than other airlines.
"We have carried out measures, such as optimizing flight network and adjusting flights, to improve our profitability, but the high debt ratio hindered our development," the carrier said. The debt ratio will be reduced to 74.12 percent from 85.73 percent after the injection.
"The cash injection will help China Southern improve capital structure, reduce debt ratio and enhance its anti-risk ability," said Ma Xiaoli, a CITIC Securities Co analyst.
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