Swire Pacific has launched a HK$3 billion ($382 million) bid to buy out minority shareholders' stakes in Hong Kong Aircraft Engineering Company (HAECO) and delist the MRO company.
Swire, which owns 75% of HAECO, has proposed to pay HK$72 ($9.20) per share for the remaining 41.6 million shares held by minority investors in the company through a deed of arrangement. After the transaction is completed, the minority shares would be cancelled.
Subject to conditions, including being agreed on by a majority of shareholders, the deal is scheduled to close by the end of February 2019.
Moelis is acting as financial advisor to Swire, while the board of HAECO will appoint an independent financial adviser, which will be announced later.
Swire says that the takeover would allow it to "consolidate its control over HAECO fully", while there appears little value in the MRO remaining a listed entity.
"Due to the low liquidity and the relative underperformance in the trading of HAECO shares, Swire views the listing of HAECO shares as no longer offering a viable source of funding for HAECO's business. In fact, HAECO has not raised any equity funds from the public equity markets for over 30 years and Swire Pacific sees no practicable opportunity for this to happen in the foreseeable future."
It adds that HAECO's listing results in administrative, compliance and other listing-related costs and expenses. Should HAECO be delisted, the funds from such costs and expenses "could be used for business operations".The move comes amid challenging times for the MRO, which saw it drop to a HK$89 million operating loss last year, reversing its HK$127 million operating profit from the year before.