China Eastern Airlines Corp and Singapore Airlines are fully committed to the agreed upon sale price of HK$3.80 a share, officials from the two carriers said in Shanghai yesterday.
"This is the only and final plan that has been approved by the Chinese government, and to achieve the plan has become our task," Luo Zhuping, China Eastern's board secretary, said in response to Air China's potential to disrupt the deal.
"We only choose to work with top companies, which can improve our products and mechanism, and we believe the restructuring of state-owned enterprises requires opening up," Luo said.
Singapore Airlines Ltd and its parent Temasek Holdings Pte signed an agreement last month to buy 24 percent of China Eastern Airlines Corp at HK$3.80 a share.
Under the terms of the deal, Singapore Airlines will spend HK$4.7 billion (US$602.48 million) on a 16-percent stake in China Eastern, and Temasek will buy an 8.3-percent stake for HK$2.5 billion.
China Eastern's parent plans to buy 1.1 billion new shares for HK$4.18 billion to maintain a majority stake.
However, some shareholders said the price is "unreasonably low" and may cause a drain on state assets. It forced the carrier to hold road shows in five cities, including Shanghai, Beijing and Hong Kong, to convince minority shareholders that the deal will be beneficial.
Luo said the price to book ratio is 6.42 in the deal, more than doubling the 3.17-ratio when Air China sold Dragon Airlines to Cathay Pacific Airways.
(Shanghai Daily December 24, 2007)
