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Swire unit Haeco surges as parent plans US$382m buyout

[BEIJING] Hong Kong Aircraft Engineering Co, a unit of Swire Pacific Ltd., jumped the most on record after the parent said it plans to pay a 64 per cent premium for shares it doesn't own, giving small investors an opportunity to exit after trading languished at minuscule volumes.

The property-to-retail conglomerate, which already owns 75 per cent of the company, proposed to pay HK$72 a share in a US$382 million buyout, according to a filing to the Hong Kong stock exchange Sunday. That compares with the previous closing price of HK$44 on June 8 and values the unit at about US$1.5 billion.

The stock of the firm that provides plane maintenance and overhaul services climbed 55 per cent to HK$68.10 on Monday in Hong Kong.

The proposal is intended to provide investors an opportunity to "realise their investment in Haeco at a significant premium" for a stock that has traded at a "low level" of liquidity, Swire said in the statement. The six-month average daily trading volume of Haeco shares through June 8 was about 0.033 million, representing only approximately 0.02 per cent of the issued stock, Swire said. The volume rose to more than 1.5 million on Monday, data compiled by Bloomberg showed.

This isn't the first time Swire has proposed a buyout of Haeco. Back in 2010, its offer of HK$105 a share failed to get enough support from shareholders, prompting the conglomerate to scrap the bid.

Based at the Hong Kong International Airport, Haeco, as the company is called, provides support to more than 100 airline customers and handles over 110,000 flight movements each year, according to its website. The Haeco group comprises 17 subsidiaries and joint ventures around the world.

The parent of the city's flag carrier Cathay Pacific Airways Ltd. said it will fund the deal with its existing cash resources. It could also explore debt financing if terms are favorable, it said.

The transaction will become effective once holders representing 75 per cent of the voting rights of shares not already owned by Swire approve the proposal by Feb. 28, 2019, according to the filing.


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