Eastern Air Logistics, the logistics arm of state-owned China Eastern Airlines, has filed for an initial public offering (IPO) with domestic securities regulators to raise more than 2.4 billion yuan (US$348 million), a Caixin report said, adding that the public offering will mark the last step for the once state-controlled company to complete a two-year restructuring to diversify its ownership.
Proceeds of the offering will be used to invest in logistics facilities, network improvements, equipment purchases and technology upgrades, said the company.
Eastern Air Logistics, formerly China Cargo Airlines, was formed in 2012 using the latter's resources to build a high-end brand for air logistics and ground services.
In June 2017, it sold a 25% stake to Legend Holdings, 10% to Global Logistic Properties, 5% each to Deppon Logistics and Greenland Financial Investment, and 10% to representatives of Eastern Air Logistics' core shareholding employees, reducing the state holding to 45%. The company has since prepared for a public listing as a final step of the mixed-ownership restructuring.
Eastern Air Logistics booked 10.7 billion yuan of revenue in 2018 and 987 million yuan of net profit, according to the prospectus. Total assets reached 5.7 billion yuan, with a debt-to-asset ratio of 47.6%.
Eastern Air Logistics, which is involved in the freight logistics business, on-ground services and logistics solutions for cross-border e-commerce and other emerging business, wholly-owns Shanghai Eastern Transport and Eastern Express, while it also holds an 83% stake in China Cargo Airlines.
HNA continues paying down debts
In another development, embattled conglomerate HNA Group said it disposed of the office building which houses the company’s flagship Hainan Airlines Beijing operations in a continuing effort to pay down debt from a years-long multibillion-dollar buying spree.
HNA said in a statement that it’s selling its 75% stake in the building to a unit of Vanke, one of China’s top real estate developers, for 1.3 billion yuan (US$189 million). This latest sale comes after HNA said last month it would sell 25% of the building to Vanke for 430 million yuan.
HNA Group earlier this year sold off its stake in Guangdong-based brokerage Lianxun Securities. It’s also reportedly looking to sell Ingram Micro, the U.S. computer component distributor it acquired for US$7.5 billion in 2016.
Transfer of A350-900 purchase rights
In other news, HNA Group said its subsidiary Hong Kong Airlines has transferred its purchase rights of two Airbus A350-900s to sister company Hainan Airlines for free, as the latter moves to ramp up capacity and growth.
As part of the deal, the HNA Group will provide a guarantee of US$509 million, and the Hainan Airlines Group will provide a counter-guarantee of US$509 million.
Hong Kong Airlines has 10 A350-900s on order. It has another six in service, and three more in storage. Meanwhile, Hainan Airlines has four A350-900s in service, and another two on order.
Hainan Airlines will also borrow US$234 million from China Development Bank to help with the purchase.
Nol van Fenema