China Southern Airlines announced (08-Mar-2010) plans to raise USD1.57 billion in funds through the non-public issuance of A Shares and H Shares, as part of efforts to reduce the company's gearing ratio, improve its capital structure and enhance its ability to mitigate risk. Details include:
- State capital injection: China Southern Air Holding Company (CSAHC), the carrier's parent company, plans use the full amount of the State's injected funding of CNY1.5 billion (USD220 million) to subscribe shares to be issued by China Southern on a non-public issue basis. China Southern has already received funding from the State with an amount of CNY3 billion (USD439 million) through a private placement to CSAHC in 2009;
- A share issue to CSAHC: Total proceeds from the non-public issue of A Shares will not be more than CNY10.75 billion (USD1.6 billion), through the sale of no more than 1.77 new A shares at a subscription price of not less than CNY5.66/A Share, which will be privately placed to not more than ten specific investors, including CSAHC. Following the issue, CSAHC's issued capital will fall from 50.24% of the total to 41.2%;
- H Share Issue: The company will privately place no more than 312.5 million new H Shares to Nan Lung, a wholly-owned subsidiary of CSAHC outside China, at a subscription price of not less than HKD2.73/H Share. Following the issue, Nan Lung will hold 10.3% of total issued share capital (up from 9.08%);
- Subscription prices: The company stated A and H share subscriptions price represent 12% and 2.5% discounts to the last five closing-day prices of the respective stocks. China Southern's shares, which were suspended on 23-Feb-2010, last traded at CNY6.62 in Shanghai and HKD2.98 in Hong Kong;
- Proceeds: Proceeds will help repay CNY14 billion (USD2.1 billion) of outstanding bank loans that mature by the end of 2011. [more - Press Release] [more - Supervisory Board Release/Regulatory Announcement]
China Southern Airlines: "In 2010, benefiting from a gradual bottoming-out of the global economy, China's economy is stabilising and resuming its growth. The domestic civil aviation industry is expected to recover to a significant extent driven by growth in investment, expansion in consumption and the events like the Asian Games in Guangzhou and the World Expo in Shanghai. For a relatively long period of time in future, passenger traffic for both domestic and international flights will continue to grow at a fast pace, and the aviation market's condition will further improve," Company Statement, 08-Mar-2010.