China’s HNA is to list a 65 per stake in Gategroup, the Swiss airline catering company it acquired less than two years ago, in the latest move by the acquisitive conglomerate to strengthen its finances.
Gategroup announced on Tuesday that an initial public offering was planned for around the end of this month, subject to approval by Six, the Swiss stock exchange. The listing is designed to raise SFr350m ($373m) to fund expansion.
The IPO comes as HNA battles to raise cash for an estimated $20bn in debt maturing this year or next. The company has sold some assets, extended credit agreements with banks and so far kept domestic creditors at bay.
HNA ran into controversy in Switzerland last year when the country’s takeover watchdog ruled that the Chinese group had provided “untrue or incomplete” information regarding its ownership when it acquired Gategroup for SFr1.4bn in 2016.
Six had no comment on Gategroup’s proposed stock market return.
The listing is one of two IPOs the Chinese conglomerate plans in Switzerland this year: HNA is also looking to raise money from a public offering of shares from aviation services group Swissport. Analysts have said that Swissport’s deal could prove more challenging than Gategroup’s, because its finances are more intertwined with its Chinese parent due to a series of short-term loans the Swiss group has made to HNA affiliates.
To tempt investors, Gategroup said a nine-strong board of directors would include five independent members. The board would be chaired by Adam Tan, HNA’s chief executive, who has been shuttling back to China regularly to try to sort out the group’s troubled finances.
The offer would allow Gategroup “to accelerate ongoing investments in our future growth”, said Xavier Rossinyol, chief executive. In his three years in the job, Mr Rossinyol has driven Gategroup’s geographical expansion but reduced its brands and focused on its core onboard food and drinks businesses. “HNA has been a strong supporter and enabler of this transformation,” he said.
While HNA had helped Gategroup develop activities in Asia, its standing with clients could be helped by becoming a public-listed company again, argued people close to the group.
Gategroup reported a 35 per cent rise in revenues last year to SFr4.6bn. Pre-tax operating profits rose 50 per cent to SFr300m.
Gapping down
In reaction to disappointing earnings/guidance:
In reaction to disappointing earnings/guidance:
- MRNS -14.3%, ASNA -13.2%, FRPT -12.5%, NLS -6.7%, SNDX -5.6%, FATE -5.5%,TGT -4%, STRL -2.4%, BLRX -1.8%, RYI -1%
M&A news:
- JWN -2.2% (Nordstrom announces the receipt and rejection of an indicative proposal to acquire the company; Nordstrom family offered $50.00/share)
Other news:
- GLYC -17.2% (GlycoMimetics announces its design for a randomized, double-blind, placebo-controlled Phase 3 clinical trial to evaluate GMI-1271 in combination with MEC Mitoxantrone, etoposide and Ara-C or in combination with fludarabine, cytosine arabinoside and idarubicin in individuals with relapsed/refractory acute myeloid leukemi )
- SCYX -11.2% ( commences an underwritten public offering of shares of its common stock and warrants)
- ARES -9.1% (announces 15 mln share offering -10 mln by selling shareholder and 5 mln by the company)
- UQM -6.2% (UQM Technologies and CNHTC have withdrawn their CFIUS Application)
- NYRT -3.8% (announces 1:10 reverse split effective at approximately 5:00pm ET on March 15, 2018 )
- GTHX -1.5% (filed for 3 mln share common stock offering)
- CDEV -1.5% (commences an underwritten public offering of 25,000,000 shares by selling shareholders)
- TRU -0.8% (pricing of underwritten secondary offering by certain of its stockholders of 19,889,564 shares of common stock )
Analyst comments:
- GRUB -2.9% (downgraded to Neutral from Buy at BofA/Merrill)
- CNI -1.1% (downgraded to Underperform from Neutral at BofA/Merrill)
- SEP -0.8% (downgraded to Hold from Buy at Stifel)
Netflix target raised to $400 at Pivotal Research Group
Pivotal Research Group raises their NFLX tgt to $400 from $300. Firm tweaked their LT int'l subscriber forecasts higher +20M to 250M int'l subscribers by '24 (up from 230M), raised their long term U.S. ARPU expectations +1 higher (to $16 in ‘24) on NFLX demonstrated pricing power and reduced their '24 int'l ARPU forecast (-$1.00 to $12.50) to better reflect future subscribers from likely lower ARPU generating countries. Firm also reminds investors that post 4Q results [which included much higher than forecast 4Q (and '18 guidance) marketing expenses] the market appeared to effectively give NFLX mgmt carte blanche to spend aggressively to drive healthy subscriber growth. All else being equal with the broader markets, as long as NFLX continues to beat and raise on subscribers they believe the stock will continue to work