×
Home Companies Industry Politics Money Opinion LoungeMultimedia Science Education Sports TechnologyConsumerSpecialsMint on Sunday
×

Cathay Pacific to raise $245 mn from HAECO stake sale

Cathay Pacific to raise $245 mn from HAECO stake sale
Comment E-mail Print Share
First Published: Wed, Sep 16 2009. 03 00 PM IST
Updated: Wed, Sep 16 2009. 03 00 PM IST
Hong Kong: Cash-strapped Cathay Pacific Airways, Hong Kong’s dominant carrier, on Wednesday said it will sell part of its stake in an aircraft maintenance company to parent Swire Pacific for $245 million.
Cathay will sell 12.45 percent of Hong Kong Aircraft Engineering Co Ltd (Haeco) for HK$1.9 billion ($245 million) or HK$91.83 per share, slightly below Haeco’s close of HK$93.30 on Wednesday, it said in a statement.
The airline is expected to post a one-time gain of HK$1.27 billion from the deal, to be booked this year.
Analysts said the fund raising would immediately help ease the company’s capital spending requirements for new aircraft, which are estimated at HK$4 billion this year and HK$7 billion in 2010.
“This is a positive move as fundraising needs for the company will decrease after this HK$2 billion deal,” said Nomura analyst Jim Wong.
The company’s net debt to equity ratio will fall to 76%, from 81% at end-June, after the completion of the transaction, he added.
After the deal, Cathay’s interest in the aircraft maintenance company will fall to 15% from 27.45%, the company said in a statement.
Cathay returned to profit in the first half of 2009, thanks to a huge fuel-hedging gain. But it warned last month of strong headwinds ahead.
The outlook for global airlines this year has worsened, with the International Air Transport Association (IATA) trade group projecting $11 billion in losses as weak passenger and cargo demand pressure revenue.
Shares of Cathay, a unit of conglomerate Swire Pacific, ended up 4% at HK$12.36 on Wednesday. They have gained 41% this year, slightly below a 49% rise on the broader market.
Comment E-mail Print Share
First Published: Wed, Sep 16 2009. 03 00 PM IST