Cathay Pacific (CX, Hong Kong International) has announced it has reached an agreement with HNA Group over the acquisition of HK Express (UO, Hong Kong International). HK Express Chief Commercial Officer Jonathan Hutt had earlier indicated that Cathay Pacific was only one of several potential suitors interested in acquiring Hong Kong's only locally-based LCC.
According to a stock market filing, Cathay Pacific will acquire 315,060,716 ordinary shares in HK Express held by HNA Aviation Group Co., Ltd, representing 100% of the airline's issued share capital, for a consideration of HKD4.93 billion Hong Kong dollars (USD628.1 million).
Of the total amount, HKD2.25 billion (USD286.66 million) is cash while the remaining HKD2.68 billion (USD341.44 million) will be paid through the issue and novation of promissory loan notes.
The sale, which has been conditioned on all regulatory requirements being met, is expected to close by December 31, 2019.
According to the disclosure, HK Express's unaudited net losses before and after taxation for the 2018 calendar year were approximately HKD141 million (USD17.96 million) and HKD141 million respectively.
For its part, Cathay Pacific said it sees the acquisition of HK Express as a practical way for it to support its long-term development and growth of its aviation business and to enhance its competitiveness.
As such, Cathay Pacific intends to retain HK Express as a standalone airline using the low-cost carrier business model.
HK Express operates eight A320ceo, five A320neo, and eleven A321ceo on scheduled flights to 25 destinations spread across Thailand, South Korea, Vietnam, Japan, China, the Northern Mariana Islands, Taiwan, and Cambodia.
