The Sydney Airport Holdings Pty Ltd (ASX: SYD) share price is edging lower after returning from its trading halt.
At the time of writing the airport operator's shares are down 1.7% to $5.30.
Why was the Sydney Airport share price in a trading halt?
Sydney Airport requested a trading halt earlier this week while it launched a fully underwritten $2 billion equity raising.
Pleasingly, this equity raising has been going very well, with the company announcing the completion of the institutional component of its offer this morning.
According to the release, Sydney Airport has raised gross proceeds of approximately $1.3 billion from institutional investors. These funds were raised at $5.30 per new share, which was $0.74 above the offer price of $4.56 per share. It represents just a 1.7% discount to its last close price of $5.39.
Management advised that the institutional entitlement offer attracted strong demand from Sydney Airport's institutional shareholders, with approximately 93% of entitlements available to eligible institutional securityholders taken up.
Sydney Airport Chief Executive Officer, Geoff Culbert, was very pleased with the success of the equity raising.
He commented: "We are delighted by the support shown by our institutional securityholders. The fact that the take up was well over 90% and that the renounced entitlements were placed at a price above TERP supports our decision to use a renounceable offer structure."
"Participating securityholders haven't been diluted and those renouncing securityholders who either couldn't or chose not to participate will be compensated through the proceeds of the institutional shortfall bookbuild. We now look forward to our retail securityholders getting the same opportunity to invest on a pro-rata basis," he added.
The chief executive believes that this strong demand shows that institutional investors have confidence in the airport's long term prospects.
Mt Culbert said: "The strong demand from institutional investors demonstrates belief in the long-term fundamentals of Sydney Airport. This equity raising will strengthen our balance sheet, ensure we are well-positioned to meet any future challenges presented by the COVID-19 crisis, and gives us the flexibility to make the most of opportunities that arise through the recovery. We thank our investors for their ongoing support."
Traffic update.
In addition to the above, the company also released a traffic update for the month of July. And as you might expect, Sydney Airport was a bit of a ghost town once again during the month.
According to the release, total passenger traffic in July was 317,000 passengers, down 91.8% on the prior corresponding period. This comprised 42,000 international passengers (down 97.2%) and 276,000 domestic passengers (down 88.5%).
Management notes that the modest recovery in domestic traffic in July was driven by a brief window where unrestricted travel was permitted between NSW, Victoria, and Queensland.
It believes the increased traffic during this short window shows there is pent up demand for interstate travel, which could be good news for the likes of Qantas Airways Limited (ASX: QAN) and Flight Centre Travel Group Ltd (ASX: FLT).
