(Yicai Global) March 28 -- China Southern Airlines Co. [SHA:600029; HKG:1055] will issue 270 million H shares to American Airlines, Inc. at a price of HKD5.74 (USD0.73) per share, it said in a statement to the Hong Kong Stock Exchange (HKEx) today.
The deal will help Southern Airlines optimize its capital structure, and increase its net assets and net assets per share to meet funding needs, the China Southern explained. The cooperation will take some time to yield the expected results, so it will not make a big difference in the companies’ earnings this year, but will build up momentum for business growth over the longer term, said the statement.
The two companies entered into a ‘share subscription agreement’ in Guangzhou, south China, yesterday. American Airlines will hold 8.83 percent of the total number of H shares and some 2.68 percent of the total number of shares issued by China Southern Airlines after the H share placement, per the agreement. The two sides also signed a framework agreement and a series of business cooperation contracts.