China Southern Airlines (China Southern) plans to issue no more than 5.44 billion new A-shares to a maximum of 35 specified investors, targeting gross proceeds of up to RMB15.00 billion.
Key terms • Pricing: The subscription price will be at least the higher of (i) 80 % of the average A-share trading price over the 20 trading days preceding the pricing benchmark date or (ii) the latest audited net asset value per share. • Investors: China Southern Air Holding (CSAH), the company’s controlling shareholder, will subscribe for between RMB5.00 billion and RMB10.00 billion of the offer. Remaining investors have yet to be finalised. • Lock-up: Shares allotted to CSAH will be subject to a 36-month lock-up; other investors face a six-month lock-up. • Mandate: All shares will be issued under a specific mandate subject to approval by independent shareholders.
Use of proceeds After deducting issuance expenses, funds will be applied as follows: 1) Up to RMB10.50 billion to purchase 46 aircraft already included in the company’s fleet plan. 2) Up to RMB4.50 billion to supplement general working capital, covering items such as fuel, maintenance and airport charges.
Listing Rules implications Because CSAH is a connected person, its subscription constitutes a connected transaction under Chapter 14A of the Hong Kong Listing Rules. Independent shareholders must approve the placement, and CSAH together with its associates (holding 66.52 % of issued shares) will abstain from voting.
Shareholding impact (assuming full subscription and no bond conversion) • CSAH: rises from 51.90 % to 55.31 %. • Public A-shareholders: increase from 22.47 % to 24.98 %. • Public H-shareholders: dilute from 11.01 % to 8.47 %. Total share count would expand from 18.12 billion to 23.56 billion.
Conditions and timetable The placement requires approvals from the company’s general meeting, CSAH’s governance bodies, the Shanghai Stock Exchange and the China Securities Regulatory Commission. If all conditions are not met within 12 months of shareholder approval—and no extension is granted—the transaction will lapse.
China Southern has not conducted any equity fund-raisings in the past 12 months. Management states that the proposed issuance will optimise fleet structure, strengthen the balance sheet and support long-term growth. Investors are advised that the transaction remains subject to regulatory and shareholder clearance and may not proceed.
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