China Eastern Airlines issues additional shares

China Eastern Airlines Co Ltd has issued new A shares, having a total subscription price of 2.29 billion yuan ($362 million), and new H shares, having a price of HK$1.62 billion ($209 million), the company announced on Sept 11.

China Eastern Air Holding Co and CES Finance Holding Co Ltd have entered into a subscription agreement to buy A shares, which can generally be bought only by mainland residents, with China Eastern Airlines.

After the completion of the subscription, China Eastern Air Holding, which is the controlling shareholder in the airline, will hold 43.63 percent of the enlarged total share of the company's capital.

CES Global Holding Ltd will subscribe in cash for 698,865,000 new H shares — which are sold on the Hong Kong stock exchange and are easier for non-mainlanders to buy — at the subscription price of HK$2.32 a share, according to the subscription agreement.

The company is under pressure from the global economy's slow recovery, the downturn seen in the international aviation services industry and stiff competition from other airliners and high-speed railways, China Eastern Airlines said in its announcement.

The airlines also said the total proceeds from the sale are to be used to repay loans from financial institutions and to supplement the company's working capital.

China Eastern Airlines has 4.3 billion yuan worth of loans that will come due between March and June 2013, according to the company's announcement.