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Form 6-K CHINA SOUTHERN AIRLINES For: May 09

May 10, 2019 6:27 AM EDT

 

 

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON D.C. 20549

 

 

FORM 6-K

 

 

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16

of the Securities Exchange Act of 1934

May 9, 2019

 

 

CHINA SOUTHERN AIRLINES COMPANY LIMITED

 

 

68 Qi Xin Road

Guangzhou, 510403

People’s Republic of China

(Address of principal executive offices)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F  ☒            Form 40-F  ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):  ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):  ☐

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes  ☐            No  ☒

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): N/A

 

 

 


China Southern Airlines Company Limited (the “Company”) published the following announcements on May 9, 2019 on the Hong Kong Stock Exchange’s website at:

http://www3.hkexnews.hk/listedco/listconews/SEHK/2019/0509/LTN20190509727.pdf, in relation to the proposed authorization by general meeting to Xiamen Airlines Company Limited on the provision of guarantees to Hebei Airlines Company Limited, Jiangxi Airlines Company Limited and Xiamen Airlines Finance (Hong Kong) Company Limited; and

http://www3.hkexnews.hk/listedco/listconews/SEHK/2019/0509/LTN20190509747.pdf, in relation to the proposed authorization by general meeting to the Company and controlled subsidiary on the provision of guarantees to wholly-owned subsidiaries.

The announcements in English are included as exhibits to this Form 6-K.


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

CHINA SOUTHERN AIRLINES COMPANY LIMITED

 

By:  

/s/ Xie Bing

Name:   Xie Bing
Title:   Company Secretary

Date: May 9, 2019

Exhibit 99.1

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

 

LOGO

OVERSEAS REGULATORY ANNOUNCEMENT

This announcement is published pursuant to Rule 13.10B of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Hong Kong Listing Rules”).

As China Southern Airlines Company Limited has published the “Announcement of China Southern Airlines Company Limited on the Proposed Authorization by General Meeting to Xiamen Airlines on the Provision of Guarantees to Hebei Airlines, Jiangxi Airlines and Xiamen Airlines Finance”, the full text of the announcement is set out below for information purpose. The mentioned transaction is required to be disclosed under the Rules Governing the Listing of Stocks on Shanghai Stock Exchange, and does not constitute any notifiable transaction or connected transaction as defined under the Hong Kong Listing Rules.

 

 

By order of the Board

China Southern Airlines Company Limited

Xie Bing

  Company Secretary

Guangzhou, the People’s Republic of China

9 May 2019

As at the date of this announcement, the Directors include Wang Chang Shun, Ma Xu Lun and Han Wen Sheng as executive Directors; and Zheng Fan, Gu Hui Zhong, Tan Jin Song and Jiao Shu Ge as independent non-executive Directors.

 

1


Stock short name: China South Air    Stock Code: 600029    Notice No.: Lin 2019-034

ANNOUNCEMENT OF

CHINA SOUTHERN AIRLINES COMPANY LIMITED ON THE PROPOSED

AUTHORIZATION BY GENERAL MEETING TO XIAMEN AIRLINES ON THE

PROVISION OF GUARANTEES TO HEBEI AIRLINES, JIANGXI AIRLINES AND

XIAMEN AIRLINES FINANCE

The board (the “Board”) of directors (the “Directors”) of the Company and all of its members confirm that the contents of this announcement do not contain misrepresentations, misleading statements or material omission, and jointly and severally accept full responsibilities for the truthfulness, accuracy and completeness of the information contained in this announcement.

Important notice:

 

   

Information on the authorization on provision of guarantees: it is proposed to authorize Xiamen Airlines Company Limited (hereinafter referred to as “Xiamen Airlines”) to provide guarantees to Hebei Airlines Company Limited (hereinafter referred to as “Hebei Airlines”), Jiangxi Airlines Company Limited (hereinafter referred to as “Jiangxi Airlines”) and Xiamen Airlines Finance (Hong Kong) Company Limited (hereinafter referred to as “Xiamen Airlines Finance”) with an aggregate balance up to RMB7 billion, RMB2.5 billion and RMB600 million or equivalent in foreign currency during the period from 1 July 2019 to 30 June 2020, respectively;

 

   

Xiamen Airlines shall provide guarantee to Jiangxi Airlines on the premise that Jiangxi Aviation Investment Co., Ltd. (hereinafter referred to as “Jiangxi Aviation Investment”), the other shareholder of Jiangxi Airlines, shall provide, in proportion to its contribution, corresponding counter guarantee to Xiamen Airlines;

 

   

As at the date of this announcement, the balance of guarantees provided by Xiamen Airlines to Hebei Airlines, Jiangxi Airlines and Xiamen Airlines Finance are approximately RMB2.296 billion, RMB1.304 billion and RMB0, respectively;

 

   

In accordance with the relevant requirements of the Articles of Association of the Company, the authorization on the provisions of guarantees is subject to consideration at the general meeting of the Company.

I. OVERVIEW OF THE GUARANTEES

In accordance with the Articles of Association of Company, the Company’s eighth session of the Board held an interim meeting by way of correspondence on 9 May 2019, in which, considered and approved unanimously that during the period from 1 July 2019 to 30 June 2020, Xiamen Airlines:

1. to provide guarantees to Hebei Airlines with an aggregate balance up to RMB7 billion or equivalent in foreign currency;

 

2


2. on the premise that Jiangxi Aviation Investment, the other shareholder of Jiangxi Airlines, shall provide, in proportion to its contribution, corresponding counter guarantee to Xiamen Airlines, to provide guarantees to Jiangxi Airlines with an aggregate balance up to RMB2.5 billion or equivalent in foreign currency;

3. to provide guarantees to Xiamen Airlines Finance with an aggregate balance up to RMB600 million or equivalent in foreign currency.

Meanwhile, the aforementioned guarantees shall be submitted to the recent general meeting of the Company for consideration and to authorize the legal representative of Xiamen Airlines or his authorized person to sign the corresponding documents as to guarantee upon the approval from the general meeting.

The number of Directors supposed to be present at the interim meeting was 7, of which 7 attended in person. The Directors approved the above resolutions unanimously after consideration. The manner and procedures for considering the relevant resolutions were in compliance with the provisions of the Company Law, Securities Law and the Articles of Association of the Company.

II. BASIC INFORMATION OF THE GUARANTEED PARTY

(I) Basic information of the guaranteed party

1. Name of the guaranteed party: Hebei Airlines Company Limited

Place of registration: World Trade Plaza Hotel, No. 303 Zhongshan East Road, Shijiazhuang

Legal representative: Zhao Dong

Registered capital: RMB2.6 billion

Business scope: Domestic (including Hong Kong, Macau and Taiwan) air passenger and cargo transport services; international (to the neighboring countries) air passenger and cargo transport services; operation and management of dedicated roads for airport; advertising design, production, agency and publishing; leasing of aviation equipment, tools and devices, and sale of aviation equipment (except for the operation prohibited or restricted by the laws, regulations and the decisions of The State Council); and import and export goods and technologies (except for the prohibition and those need to approved in the country); insurance broker and agency services; food and beverages services; retail of prepackaged foods, daily necessities, artware and souvenir. (Projects that are subject to approval according to the laws may only be carried out after approval by the relevant department).

Material contingencies affecting solvency of the guaranteed party: None

 

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As at the date of this announcement, the guaranteed party was rated AA+ for the credit rating by Industrial and Commercial Bank of China.

Shareholding structure: Hebei Airlines is owned as to 99.47% by Xiamen Airlines and 0.53% by Shenyang Zhongrui Investment Co., Ltd., respectively.

Financial information for the latest one year and one period:

 

            Unit: RMB million  

Item

   As at 31 December 2018      As at 31 March 2019
(unaudited)
 
Total assets      4,082.66        3,770.61  
Total liabilities      2,123.45        1,878.60  
Total bank loans      0        0  
Total current liabilities      1,181.51        990.93  
Net assets      1,959.21        1,892.01  
     January-December 2018       

January-March 2019

(unaudited

 

Revenue      2,637.41        769.84  

Net profit

     11.06        -67.20  

2. Name of the guaranteed party: Jiangxi Airlines Company Limited

Place of registration: Changbei International Airport, Xinjian District, Nanchang, Jiangxi Province

Legal representative: Huang Huo Zao

Registered capital: RMB2 billion

Business Scope: Domestic (including Hong Kong, Macau and Taiwan) air passenger and cargo transport services; international (to the neighboring countries) air passenger and cargo transport services; maintenance of aircraft/airframes, power units, aircraft components other than the entire engine/propeller, aircraft/engine non-destructive testing, aviation material supply chain management, self-operation and as agent for import and export of various commodities and technologies (except for the import and export of commodities and technologies to be carried out by companies being prohibited or restricted by the state); other retail businesses not listed (excluding those subject to permit and approval); all types of domestic advertising design, production, distribution, and agency. (Projects that are subject to approval according to the laws may only be carried out after approval by the relevant department).

Material contingencies affecting solvency of the guaranteed party: None

As at the date of this announcement, the guaranteed party was rated BBB+ for the credit rating by Bank of China.

 

4


Shareholding structure: Jiangxi Airlines is owned as to 60% by Xiamen Airlines and 40% by Jiangxi Aviation Investment, respectively.

Financial information for the latest one year and one period:

 

            Unit: RMB million  

Item

   As at 31 December 2018      As at 31 March 2019
(unaudited)
 
Total assets      2,302.84        2,283.73  
Total liabilities      572.72        590.31  
Total bank loans      0        0  
Total current liabilities      282.72        314.01  
Net assets      1,730.12        1,693.42  
     January-December 2018       

January-March 2019

(unaudited

 

Revenue      914.18        305.34  

Net profit

     -95.15        -36.69  

3. Name of the guaranteed party: Xiamen Airlines Finance (Hong Kong) Company Limited

Place of registration: Unit 1208, North Point City Centre, 250 King’s Road, North Point, Hong Kong

Legal representative: Che Shang Lun

Registered capital: HKD30 million

Business scope: Import and export trade, procurement of aircraft, procurement of engines, procurement of aviation materials, procurement of jet fuel, aircraft leasing, aviation consulting services and other services.

Material contingencies affecting solvency of the guaranteed party: None

Shareholding structure: Xiamen Airlines Finance is owned as to 100% by Xiamen Airlines.

 

            Unit: RMB million  

Item

   As at 31 December 2018      As at 31 March 2019
(unaudited)
 
Total assets      1.96        14.90  
Total liabilities      0.02        0.02  
Total bank loans      0        0  
Total current liabilities      0.02        0.02  
Net assets      1.94        14.88  
     January-December 2018       

January-March 2019

(unaudited

 

Revenue      -0.04        0.25  

Net profit

     0.02        0.20  

 

5


(II) Relationship between the Guaranteed Party and the Company

Xiamen Airlines, a controlled subsidiary of the Company, is owned as to 55% by the Company, 34% by Xiamen Jianfa Group Co., Ltd. and 11% by Fujian Investment and Development Group Company Limited. Hebei Airlines is a controlled subsidiary of Xiamen Airlines, which owns 99.47% shareholdings of Hebei Airlines. Jiangxi Airlines is a controlled subsidiary of Xiamen Airlines, which owns 60% shareholdings of Jiangxi Airlines. Xiamen Airlines Finance is a wholly-owned subsidiary of Xiamen Airlines.

III. MAIN CONTENTS OF AUTHORIZATION ON THE PROVISION OF GUARANTEES

(I) Provision of Guarantees by Xiamen Airlines for Hebei Airlines

1. Guarantee Method : joint liability guarantee

2. Guarantee Amounts: aggregate balance up to RMB7 billion or equivalent in foreign currency during the period from 1 July 2019 to 30 June 2020.

3. Coverage: the principal amount, interest, liquidated damages, damage awards and costs for realization of creditor’s right involved in the financing contract and aircraft leasing contract of Hebei Airlines.

4. Period of Guarantee: agreed based on the period of principal debt.

(II) Provision of Guarantees by Xiamen Airlines for Jiangxi Airlines

1. Guarantee Method : joint liability guarantee

2. Guarantee Amounts: aggregate balance up to RMB2.5 billion or equivalent in foreign currency during the period from 1 July 2019 to 30 June 2020.

3. Coverage: the principal amount, interest, liquidated damages, damage awards and costs for realization of creditor’s right involved in the financing contract and aircraft leasing contract of Jiangxi Airlines.

4. Period of Guarantee: agreed based on the period of principal debt.

 

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(III) Provision of Guarantees by Xiamen Airlines for Xiamen Airlines Finance

1. Guarantee Method : joint liability guarantee

2. Guarantee Amounts: aggregate balance up to RMB600 million or equivalent in foreign currency during the period from 1 July 2019 to 30 June 2020.

3. Coverage: the principal amount, interest, liquidated damages, damage awards and costs for realization of creditor’s right involved in the financing contract of Xiamen Airlines Finance.

4. Period of Guarantee: agreed based on the period of principal debt.

As at the date of this announcement, Xiamen Airlines shall not exceed the scope of authorization to enter into any relevant guarantee agreement with any third-party entity. The foregoing approved guarantee limit shall be only the guarantee limit available to be provided by Xiamen Airlines as authorized. As to the specific guarantee amount within the foregoing guarantee limit, the guarantee contract entered into with relevant financial institutions shall prevail. The Company will perform its information disclosure obligations according to the actual signing of guarantee contract.

IV. OPINIONS OF THE BOARD

The important decisions and daily operations of Hebei Airlines and Jiangxi Airlines (as the subsidiaries of Xiamen Airlines) and Xiamen Airlines Finance (as the wholly-owned subsidiary of Xiamen Airlines), are under the absolute control of Xiamen Airlines, and hence the significant risks are foreseeable and under effective management. Xiamen Airlines has developed strict fund raising standards for strictly monitoring the fund raising of Hebei Airlines, Jiangxi Airlines and Xiamen Airlines Finance. The Board is of the opinion that Hebei Airlines, Jiangxi Airlines and Xiamen Airlines Finance have adequate solvency under centralized operation and management by Xiamen Airlines. Xiamen Airlines provides guarantees to Hebei Airlines, Jiangxi Airlines and Xiamen Airlines Finance by taking full considerations of their actual needs for production, operation and development. This would help to expand their financing channels, reduce their financing costs and meet the overall needs for the development of the Company and Xiamen Airlines. The Board approved to propose to the general meeting for considering and approving the aforesaid provision of guarantees.

Independent Directors of the Company express their independent opinions on the aforesaid provision of guarantees as follows: 1. approved Xiamen Airlines to provide to Hebei Airlines, Jiangxi Airlines and Xiamen Airlines Finance, a respective guarantee with an accumulative balance of not more than RMB7 billion, RMB2.5 billion and RMB600 million or equivalent in foreign currency by taking full considerations of the actual needs for production, operation and development of the abovementioned companies. This would help to expand their financing channels, reduce their financing costs and satisfy their needs for existing and new loans;

 

7


Xiamen Airlines Finance acts as the offshore financing platform of Xiamen Airlines and this helps enhance its financing ability. The provision of guarantees meets the overall needs for the development of the Company and Xiamen Airlines and is also in the interests of the Company and all shareholders; 2. the guaranteed parties Hebei Airlines, Jiangxi Airlines and Xiamen Airlines Finance are controlled subsidiaries of Xiamen Airlines. And the guarantee to Jiangxi Airlines is based on the premise that Jiangxi Aviation Investment, the other shareholder of Jiangxi Airlines, shall provide, in proportion to its contribution, corresponding counter guarantee to Xiamen Airlines. Therefore, the Company and Xiamen Airlines can effectively control and prevent the guarantee risks, and no damage would be caused to the interests of the Company and all shareholders; 3. the decision-making procedures of the Board in respect of the abovementioned guarantees are in compliance with the requirements of the listing rules of the listing place and the Articles of Association of the Company, and are legitimate and effective.

V. STATUS OF THE ACCUMULATED EXTERNAL GUARANTEES

As at the date of this announcement, the Company and Xiamen Airlines provided loan guarantees to self-sponsored trainee pilots with respect to their training fees. The outstanding loan guaranteed was approximately RMB306.3899 million, representing approximately 0.47% of the Company’s audited net assets for the latest period and the amount in respect of the joint-liability guarantees is approximately RMB20.6685 million. The balance of guarantees provided by the Company and controlled subsidiaries to 26 special purpose vehicles in operation was US$3.736 billion, and no overdue guarantees up to date. The balance of guarantee provided by Xiamen Airlines for its controlled subsidiaries was RMB3.6 billion. The total guarantee amount provided by the Company and controlled subsidiaries for their controlled subsidiaries was approximately RMB28.818 billion, representing approximately 44.33% of the Company’s audited net assets for the latest period (all of the above figures in relation to the guarantees are unaudited).

Board of Directors of

China Southern Airlines Company Limited

9 May 2019

 

8

Exhibit 99.2

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

 

LOGO

OVERSEAS REGULATORY ANNOUNCEMENT

This announcement is published pursuant to Rule 13.10B of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Hong Kong Listing Rules”).

As China Southern Airlines Company Limited has published the “Announcement of China Southern Airlines Company Limited on the Proposed Authorization by General Meeting to the Company and Controlled Subsidiary on the Provision of Guarantee to Wholly-owned Subsidiaries”, the full text of the announcement is set out below for information purpose. The mentioned transaction is required to be disclosed under the Rules Governing the Listing of Stocks on Shanghai Stock Exchange, and does not constitute any notifiable transaction or connected transaction as defined under the Hong Kong Listing Rules.

 

 

By order of the Board

China Southern Airlines Company Limited

Xie Bing

  Company Secretary

Guangzhou, the People’s Republic of China

9 May 2019

As at the date of this announcement, the Directors include Wang Chang Shun, Ma Xu Lun and Han Wen Sheng as executive Directors; and Zheng Fan, Gu Hui Zhong, Tan Jin Song and Jiao Shu Ge as independent non-executive Directors.

 

1


Stock short name: China South Air   Stock Code: 600029   Notice No.: Lin 2019-035

ANNOUNCEMENT OF

CHINA SOUTHERN AIRLINES COMPANY LIMITED ON THE PROPOSED

AUTHORIZATION BY GENERAL MEETING TO THE

COMPANY AND CONTROLLED SUBSIDIARY ON THE PROVISION OF

GUARANTEES TO WHOLLY-OWNED SUBSIDIARIES

The board (the “Board”) of directors (the “Directors”) of the Company and all of its members confirm that the contents of this announcement do not contain misrepresentations, misleading statements or material omission, and jointly and severally accept full responsibilities for the truthfulness, accuracy and completeness of the information contained in this announcement.

Important notice:

 

   

Information on the authorization on provision of guarantees:

 

Guaranteed party

  

Guaranteed

amount

  

Is there
any

counter-
guarantee

  

Guarantor

Southern Airlines No. 11 Lease (Guangzhou) Company Limited (final names subject to business registration)    The maximum amount of US$370.5 million, equivalent to approximately RMB2.501 billion (calculated based on exchange rate of US$1 against RMB6.75, same for the below)    No    China Southern Airlines Company Limited (hereinafter referred to as the “Company”)
19 companies, including “Xiamen Airlines No. 1 Lease Company Limited” to “Xiamen Airlines No. 19 Lease Company Limited” (final names subject to business registration)    The maximum amount of US$250 million, equivalent to approximately RMB1.688 billion.    No    Xiamen Airlines Company Limited, a controlled subsidiary of the Company (hereinafter referred to as “Xiamen Airlines”)

 

   

As of the date of this announcement, the balance of external guarantees for Special Purpose Vehicle (hereinafter referred to as “SPV”) provided by the Company and controlled subsidiary, Chongqing Airlines Company Limited (hereinafter referred to as “Chongqing Airlines”), were approximately US$3.36 billion (equivalent to approximately RMB22.68 billion) and US$376 million (equivalent to approximately RMB2.538 billion) (unaudited), respectively;

 

2


   

In accordance with the relevant requirements of the Articles of Association of the Company, this authorization on the provision of guarantees shall be submitted to the general meeting of the Company for approval.

I. OVERVIEW OF THIS GUARANTEES

Pursuant to the requirements of Articles of Association, on 9 May 2019, the Company’s eighth session of the Board held an interim meeting by way of correspondence, and considered and approved the Company and its controlled subsidiary, Xiamen Airlines, to provide a total guarantee not exceeding US$620.5 million (equivalent to approximately RMB4.189 billion) to 20 newly established SPV from 1 July 2019 to 30 June 2020, of which the total guarantee to be provided by the Company for 1 SPV will not exceed US$370.5 million and the total guarantee to be provided by Xiamen Airlines for 19 SPVs will not exceed US$250 million. The Board has agreed the Company and Xiamen Airlines to allocate and adjust specific guarantee amounts for their respective SPV according to the actual number of aircraft under operation and the lease term within their respective maximum guarantee amounts, and submitted the above guarantees to the upcoming general meeting of the Company and authorized the General Manager of the Company’s Finance Department or his authorized person and the legal representative of Xiamen Airlines or its authorized person to respectively enter into corresponding documents as to guarantee upon the approval from the general meeting.

The number of Directors supposed to be present at the interim meeting was 7, of which 7 attended in person. The Directors approved the above resolutions unanimously after consideration. The manner and procedures for considering the relevant resolutions were in compliance with the provisions of the Company Law, Securities Law and the Articles of Association of the Company.

II. BASIC INFORMATION OF THE GUARANTEED PARTIES

The main information of the 20 SPVs to which the guarantee are given is as follows:

1. The 20 SPVs are respectively China Southern Airlines No.11 Lease (Guangzhou) Company Limited, “Xiamen Airlines No. 1 Lease Company Limited” to “Xiamen Airlines No. 19 Lease Company Limited” (final names subject to business registration);

2. Registered address: Dongjiang Free Trade Port Zone of Tianjin, Guangzhou Nansha Free Trade Zone and Fujian Free Trade Zone etc (final address subject to business registration);

3. Registered capital: from RMB0.1 million to RMB0.2 million, depending on the quantity and model of the operating aircraft of each SPV;

 

3


4. The main business scope of the SPV established by the Company: aircraft and engine leasing business; cargo and technology import and export business; receipt of lease deposit from lessees, receive and transfer lease receivable, realizing residual value of and disposal of the leased goods (the business scope shall be subject to the review of the commercial and industrial departments and the approved business scope shall prevail);

The main business scope of SPV established by Xiamen Airlines: aircraft leasing business; cargo and technology import and export business (the business scope shall be subject to the review of the commercial and industrial departments and the approved business scope shall prevail).

5. Material contingencies affecting the guaranteed parties’ solvency: None;

6. The Company and Xiamen Airlines hold respectively 100% equity of the above mentioned 20 SPVs;

7. As of the date of this announcement, the above mentioned 20 SPVs have not been established.

III. MAIN CONTENTS OF AUTHORIZATION ON THE PROVISION OF GUARANTEES

 

Name of Guaranteed

party

  

Guarantee

Limit

  

Type of

Guarantee

  

Guarantee
Method

  

Period of

Guarantee

  

Major Content of Guarantee
Agreement

Southern Airlines No. 11 Lease (Guangzhou) Company Limited    The maximum amount of US$370.5 million (equivalent to approximately RMB2.501 billion)   

Credit

Guarantee

   Joint Liability Guarantee   

The period

of guarantee is the same as aircraft leasing period with a maximum of 12 years. If a lease extension occurs, the period of guarantee shall be extended accordingly.

   The Company provides guarantees in respect of debts owned by SPV to overseas lessor (such as rent payable) and liabilities under the lease agreement. If SPV fail to settle debts or liabilities under the lease agreement in whole or part, the Company shall fulfill the obligation of guarantee as agreed, and undertake an obligation in respect of rent and other payables to overseas lessor and liabilities under the lease agreement.
19 companies, including “Xiamen Airlines No. 1 Lease Company Limited” to “Xiamen Airlines No. 19 Lease Company Limited”    The maximum amount of US$250 million (equivalent to approximately RMB1.688 billion).

 

4


The Company and Xiamen Airlines may allocate and adjust specific guarantee amounts for their respective SPV according to the actual number of aircraft under operation and the lease term within their respective maximum guarantee amounts.

IV. OPINIONS OF THE BOARD

The Board of the Company considers that the provision of guarantee for 20 new SPV by the Company and its controlled subsidiary, Xiamen Airlines, is beneficial for the Company to obtain policy support in free trade zone through sub-leasing structural business and lower aircraft leasing cost and in the interests of the Company and all shareholders as a whole. As wholly-owned subsidiaries of the Company and Xiamen Airlines, the significant decisions and daily operation of the above 20 SPV are fully controlled by the Company and Xiamen Airlines, significant risk can be identified in advance and prevented effectively.

Independent Directors of the Company issued independent opinions on the above matters as follows: 1. agreed that the Company and Xiamen Airlines provide a total guarantee not exceeding US$620.5 million to 20 new SPVs from 1 July 2019 to 30 June 2020. The guarantees above are beneficial for the Company and Xiamen Airlines to transform overseas aircraft leasing structure to domestic aircraft leasing structure and hence reducing aircraft leasing cost and are in the interests of the Company and all shareholders; 2. the guaranteed parties are the SPV, which are wholly-owned subsidiaries of the Company and Xiamen Airlines, significant risk can be identified in advance and prevented effectively by the Company and will not damage the interest of the Company and all shareholders; 3. the decision-making procedures of the Board in respect of the abovementioned guarantees are in compliance with the requirements of the listing rules of the listing place and the Articles of Association of the Company, and are legitimate and effective.

V. STATUS OF THE ACCUMULATED EXTERNAL GUARANTEES

As at the date of this announcement, the Company and Xiamen Airlines provided loan guarantees to self-sponsored trainee pilots with respect to their training fees. The outstanding loan guaranteed was approximately RMB306.3899 million, representing approximately 0.47% of the Company’s audited net assets for the latest period and the amount in respect of the joint-liability guarantees is approximately RMB20.6685 million. The balance of guarantees provided by the Company and controlled subsidiaries to 26 special purpose vehicles in operation was US$3.736 billion, and no overdue guarantees up to date. The balance of external guarantee provided by Xiamen Airlines for its controlled subsidiaries was RMB3.6 billion.

 

5


The total external guarantee amount provided by the Company and controlled subsidiaries for their controlled subsidiaries was approximately RMB28.818 billion, representing approximately 44.33% of the Company’s audited net assets for the latest period (all of the above figures in relation to the guarantees are unaudited).

Board of Directors of

China Southern Airlines Company Limited

9 May 2019

 

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