The long-awaited strategic cooperation between the mainland's
third-largest carrier, China Eastern Airlines, with Singapore
Airlines and Temasek is almost a done deal, China Eastern Chairman
Li Fenghua said yesterday, hosing down rumors that Air China might
move to block it.
In a news conference announcing the final details of the deal,
Li said it was next to impossible that Air China's parent company,
a shareholder in China Eastern, would vote down the deal at the
upcoming extraordinary general meeting on January 8.
"I can tell you that the deal is a (central) government
decision, not just a corporate decision," Li said.
Rumors that Air China, 17 percent owned by Cathay Pacific, may
attempt to obstruct the deal arose after Air China's parent company
spent HK$32 million to increase its stake in China Eastern last
week. This came after a failed move by the airline to acquire China
Eastern earlier in September.
As hopes for a higher bid evaporated, China Eastern shares
plunged 12.7 percent to close at HK$6.53 yesterday.
The strategic deal between China Eastern, Singapore Airlines and
the Singapore state investment agency Temasek, has been in the
making for more than two years.
Once approved, China Eastern will issue 2.98 billion new H
shares at a subscription price of HK$3.8 each.
However, many question whether the price was set too low, since
China Eastern shares were already trading at 72 percent over the
subscription price yesterday. The chairman disagreed, and explained
the figure was derived from the 30-day average closing price of the
airline's H shares before its trading suspension in May. "This (new
share price) is the only, and the final, proposal that all three
parties agreed upon as being fair," Li said.
Trading in China Eastern shares was suspended for more than
three months in anticipation of the details of the strategic deal
rolling out.
(China Daily December 14, 2007)
