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SF Express launches bond issue to bankroll expansion

Chinese cargo carrier SF Express Group announced that it has tapped the debt capital markets with six-year convertible bonds to raise CNY5.8 billion ($820 million). The group is the second-largest courier company in China, and the first private express delivery company with an airline subsidiary in mainland China. 

The company plans to spend CNY1.52 billion of the bond proceeds on converting three B757-200 aircraft from passenger to freighter configuration at Precision Aircraft Solutions and towards maintaining its current fleet. The three aircraft will be operated by the company’s fast-growing SF Airlines unit. The additional aircraft will increase the SF Airlines-owned fleet to 60 Boeing freighter aircraft by early 2020. Precision redelivered a B757-200 aircraft to SF Airlines in September, marking the 24th passenger-to-freighter B757 aircraft to join the carrier.

The company will use CNY1.49 billion of the debt issue to develop a logistics information platform. Proceeds also will be used to boost liquidity, retire debt and expand the company’s land transport capacity.

SF Airlines launched service from China to Europe in mid-September. The thrice-weekly service operates between Wuxi in China and Frankfurt-Hahn Airport in Germany with an intermediary stop in Chongqing. The service offers 600 tons of capacity on the route.

The company reports that outbound service includes electronic products from China with last-mile delivery throughout mainland Europe. The China inbound expansion focuses on general cargo for automotive, spare parts, heavy machinery, chemicals and electronic products.

SF Express is expected to launch a thrice-weekly service connecting Hangzhou and New York later this year.