BEIJING, March 9 China Southern Airlines Co Ltd (1055.HK) (600029.SS), the country's top carrier by fleet size, plans to raise up to 10.75 billion yuan ($1.6 billion) from a discounted share issue, it said on Monday.
The airline will issue up to 1.77 billion new A shares in Shanghai to up to 10 specific investors, including its state-owned parent, at a price of at least 5.66 yuan.
It will also issue up to 312.5 million H shares to parent China Southern Air Holding Company's Hong Kong subsidiary at up to HK$2.73.
China Southern's shares, which were suspended on Feb. 23, last traded at 6.62 yuan in Shanghai and HK$2.98 in Hong Kong. Trading in H shares will resume on Tuesday.
The company said the price represented a 12 percent discount to the last five closing-day prices of its Shanghai stock.
It will use the proceeds to pay off up to 30 bank loans, totalling $1.35 billion and 4.8 billion yuan. Further borrowing would have caused its financial position to deteriorate, it said in the statement, posted here
China's airlines have struggled since 2008 due to a slowing economy hit by the global financial crisis.
The Chinese government has handed out cash to the sector and encouraged it to scrap or delay aircraft orders after the country's air travel growth fell into single digits in 2008 for the first time in five years.
If the entire offer is taken up, Southern Air's parent China Southern Air Holding Company will see its shareholding fall to 51.50 percent of the total issued share capital from 59.32 percent, including the H shares held by its Hong Kong unit Nan Lung.
Publicly held H shares will make up 17.41 percent, down from 21.94 percent, while publicly held A shares will account for 31.09 percent, up from 18.74 percent before the issue. ($1=6.825 Yuan) (Editing by Karen Foster)