Air China Ltd's parent yesterday said an offer by Singapore
Airlines Ltd for a stake in China Eastern Airlines Corp did not
reflect fair value and asked both parties to renew talks.
The proposed sale price of HK$3.8 per share "does not reflect
the fair value of China Eastern Airlines," Air China's parent,
China National Aviation Holding Co, said in a statement e-mailed by
its media representative, Wonderful Sky Financial Group Ltd.
Opposition by China National Aviation, which holds about 10
percent of China Eastern's minority shareholders, may scuttle the
HK$7.2 billion (US$918 million) sale, which needs approval from
two-thirds of the minority shareholders to pass on January 8.
SIA and parent Temasek Holdings Pte are seeking to buy 24
percent of China Eastern to expand in China's growing aviation
market.
Under the plan, China Eastern's parent company would also invest
HK$4.2 billion to maintain its majority, Bloomberg News said.
China National Aviation said in the statement that some of the
proposed terms required amendment before the plan was
acceptable.
Unequal treatment
"Anti-dilution rights that China Eastern Airlines has agreed to
grant to Singapore Airlines and Temasek and the non-competition
clause in the investor subscription agreement fails to treat other
shareholders of China Eastern Airlines equally and is unfair to the
domestic and international investors," the statement said.
The clause may "also place a potential obstacle to the future
development of the domestic airlines industry as a whole," the
statement said. China Eastern should conduct further discussions
with its Singapore partners to amend the plan to one which was
acceptable to China National Aviation, it added.
'Super carrier'
China National Aviation Chairman Li Jiaxiang, a former air force
general who turned Air China into the world's biggest airline by
market value, aims to build a domestic "super carrier" to provide
stable earnings as it competes internationally with SIA and Japan
Airlines Corp.
A tie-up with China Eastern would give Air China a base in
Shanghai, China's commercial capital, and would enable it to
dominate the world's fastest-growing air market.
(Shanghai Daily January 2, 2008)
