Hainan Airlines of China has unveiled its restructuring plan. It will include circulating 3.4 billion shares to take over stakes owned by parent HNA Group’s with an investment of CNY10.5 billion ($1.6 billion) and circulating non-public A shares to 10 investors to raise no more than CNY7 billion.
According to a Shanghai Stock Exchange filing, the Haikou-based carrier plans to purchase the following stakes from parent HNA Group: 61% of HNA Technic; 60% of HNA Aviation; 100% of Sky Plumage;60% of West Holding; and 30% of West Air.
The total deal is worth CNY10.5 billion. After the transaction is complete, Hainan Airlines will hold the following stakes: 54% of HNA Aviation; 94% of Chongqing-based West Air; and 60% of West Holding, a West Air stakeholder. Additionally, HNA Technic and Sky Plumage will become wholly owned subsidiaries.
Hainan Airlines also plans to circulate A shares to 10 investors, including Singapore’s Temasek, which is expected to invest CNY700 million to raise CNY7 billion to fund the following projects: HNA Technic’s aero engines MRO investment; HNA Technic’s Xi’an aircraft components MRO investment; Chongqing Sky Plumage aviation training; Shan’xi Chang’an Sky Plumage aviation training; Haikou Sky Plumage purchase of aircraft simulators; West Air’s production base in Chongqing Jiangbei International Airport; and West Air’s order of four aircraft.
In April, Hainan Airlines parent HNA Group signed an agreement at the Boao Forum for Asia with Singapore Temasek Group. Both companies are committed to exploring commercial cooperation opportunities in the fields of aviation and logistics transport, including air catering, ground handling service, duty-free commodities, airport infrastructures and equipment.
According to the filing, the restructuring may change the controlling ownership of Hainan Airlines Holding into the Hainan Cihang Charity Foundation. Currently, Grand China Air is the largest shareholder with a 24.3% stake; HNA Group is the fourth biggest shareholder with a 3.5% stake.
Hainan Airlines Holding noted these deals still need approval from relevant parties and cannot resume trading until it secures Shanghai Stock Exchange approval. The carrier suspended trading Jan. 10 to conduct a major asset restructuring.