Hainan Airlines plunges in China as trading reopens after 6-month suspension
The carrier says its de facto controller will change to Cihang Foundation from the provincial regulator of state-owned enterprises after an acquisition plan is completed
Shares in Hainan Airlines Holding, the listed flagship enterprise of embattled Chinese conglomerate HNA Group, skidded by its daily limit on Friday as trading resumed following a six-month suspension, after the company announced details of a previous plan to issue 10.5 billion yuan (US$1.6 billion) of consideration shares and also to raise 7.04 billion yuan in cash through a private placement targeting Temasek and other investors that will fund the carrier’s acquisition of several domestic firms.
Hainan Airlines immediately fell 10 per cent at the market open to 2.91 yuan on the Shanghai Stock Exchange. The firm’s market value also quickly shrank 5.4 billion yuan to 49 billion yuan.
It is the third unit of the HNA Group to resume trading after a six-month halt. Earlier this week, HNA-Caissa Travel Group and Bohai Capital Holding also plummeted quickly when trading reopened, erasing a combined US$1.6 billion in market capitalisation.
Friday’s stock plunge came after HNA Holdings announced it would issue about 3.36 billion consideration shares at 3.12 yuan each to acquire stakes in several firms. The consideration shares are worth 10.5 billion yuan.
To support the acquisition, it would also raise 7.04 billion yuan in cash from a private placement of A shares in the over the counter market to no more than 10 investors, including Temasek Fullerton Alpha, an asset management arm of Singapore’s state investment firm Temasek.