SkyEurope shares surge on €56.3 mln investment

Shares of SkyEurope Holding AG surged 13% after the Slovak low-cost airline said it will sell €56.3 million worth of shares and bonds to fund growth. The rose 25 cents to €2.15 in Vienna. The stock is down 56% this year, giving the Bratislava, Slovakia-based carrier a market value of €43 million. The airline will raise €38.8 million from an investment by York Global Finance and €17.5 million from a public offering of shares, SkyEurope said in an e-mailed statement August 28. The new funds will be used to pay for new aircraft and add routes across eastern and central Europe. „Investors had perceived the company's lack of cash as a risk,” said Hartmut Moers, an analyst at Bank Sal Oppenheim in Frankfurt with a „buy” recommendation on SkyEurope shares. „If all goes according to plan, SkyEurope will now have sufficient resources for the winter and beyond.” The share sale follows an agreement on August 24 for a long-term loan from the Bank of Scotland to buy four new Boeing Co. 737-700 airplanes for delivery in 2007. The shares rose 4.7% that day, and jumped 6.7% yesterday. London-based York will buy around 9 million new shares at €1.75 a share, the statement said. York will also buy about €6.7 million worth of bonds „mandatorily” convertible into 3.8 million new shares. It will also purchase €17 million worth of bonds that need not be converted into shares. The investment would give York a 29.9% stake in the airline. In addition, new and existing shareholders will be able to buy a total of 10 million new shares at €1.75 apiece, the company said. (Bloomberg)