Hainan Air Nears 2-Week High After Cutting Fundraising Plan

  • Share sale reduced to 16.6 billion yuan from 24 billion yuan
  • HNA Group scraps plans to participate in private placement

China’s Hainan Airlines Co. closed at its highest level in nearly two weeks in Shanghai after the carrier scaled back a planned share sale following its parent company’s withdrawal from the private placement and a further drop in oil prices.

The country’s fourth-largest carrier climbed as much as 5.9 percent Tuesday, but pared gains to end up 1.3 percent at 3.96 yuan, its highest closing level since Nov. 26. That compares to a 1.9 percent decline in the Shanghai Composite Index.

Hainan Air now plans to sell as many as 4.62 billion shares to raise 16.6 billion yuan ($2.6 billion) in a private placement, down from the 24 billion yuan previously announced, the company said in a filing Tuesday.

"The smaller placement plan is positive for share price because of the smaller stake dilution, but low oil prices is also another positive today," said Zhang Qi, a Shanghai-based analyst with Haitong Securities Co.

Oil traded near its lowest level in more than six years, having plunged 40 percent in the past year.

The Haikou-based carrier said it has dropped plans to repay bank loans with part of the proceeds, but still plans to use the funds to help buy 37 aircraft and acquire a 48.21 percent stake in Tianjin Airlines Co.

The filing to the Shanghai stock exchange didn’t say why the airline’s parent, HNA Group Co., decided not to take part in the placement. Two calls to HNA Group’s media office were not answered.

— With assistance by Clement Tan

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