Thursday December 11, 08:08 AM
Parents of China Southern, China Eastern tighten hold with aid
SHANGHAI (AFP) - The parent firms of two of China's biggest airlines will use the 438 million dollars they each received in government aid to strengthen their stakes in the carriers, statements filed Thursday said.
China Southern Airlines, the nation's largest carrier by fleet size, said it will issue 721.2 million new yuan-denominated A shares and the same amount in H shares to its state-owned parent China Southern Air Holding Company.
Its smaller rival China Eastern Airlines said in separate statements it would issue 652.2 million new A shares to its parent China Eastern Air Holding Company the same amount of H shares.
The money would be used to repay bank loans and fund working capitals, the carriers said in statements filed with the Shanghai Stock Exchange.
The change in share structures dillutes minority shareholders' stakes, Zhang Yongpan, a Shanghai-based analyst with Qilu Securities said.
"The share sale will consolidate the government's controlling holdings in the airlines," he said.
Based on the deal, China Southern valued the new A shares issued at 3.16 yuan -- less than the 3.66 yuan its shares traded at Thursday after rising the maximum 10 percent limit.
China Eastern valued the new shares at 3.60 yuan -- less than the 4.32 yuan it shares traded at Thursday after rising the daily limit.
Trading in the shares of the two carriers had been suspended since November 27 when the government aid was announced.
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