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Hainan Airlines raises CNY 7bn to fund CNY 10bn in acquisitions
Posted on Monday, 11 June 2018 13:47
Hainan Airlines Holding is looking to scale up growth amid a rapidly developing domestic aviation industry by raising CNY 7.03 billion (USD 1.10 billion) to finance the acquisition of CNY 10.48 billion-worth of HNA-affiliated assets. The carrier is selling a 15.0per cent enlarged stake to no more than ten investors to bankroll the purchase of planes, as well as projects ranging from pilot training to maintenance facilities. It will become the controlling shareholder of: HNA affiliates: HNA Aviation Technic, HNA Aviation Hong Kong Technics, Hainan Tianyu Flight Training, Western Airlines and Chongqing Western Airlines Holdings. Hainan Airlines has roped in an arm of Temasek as a subscriber for a stake worth CNY 700.00 million, though the investment comes with a three-year-lock-up for the Singaporean sovereign wealth fund, as opposed to 12 months for the other participants. The equity dilution results in an ownership change for the carrier currently controlled by Grand China Air, which in turn is owned by the Hainan branch of State-owned Assets Supervision and Administration Commission. Following the stock sale, its major shareholder will be Hainan Province Cihang Foundation, which is connected to HNA. The capital increase comes just two months after Temasek and the debt-laden conglomerate announced they were exploring possible aviation and logistics business partnerships. Hainan Airlines and its subsidiaries have nearly 1,800 domestic and international routes but plan to continue adding additional ones from such cities as Beijing, Shanghai and Guangzhou. The addition of flight training and aircraft maintenance operations will support expansion and strengthen operations. Hainan Airlines had a debt to asset ratio of 62.5 per cent, as of 31st December 2017, up 8.3 basis points from 54.1 per cent at the end of 2016. © Zephus Ltd