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CHINA / National |
Deal inked on sale of China Eastern stakeBy Jin Jing (China Daily)
Updated: 2007-09-03 07:32 SHANGHAI: China Eastern Airlines Co Ltd yesterday signed an agreement to sell a combined 24 percent stake to Singapore Airlines and Lentor Investment Pte Ltd, a wholly owned subsidiary of Temasek Holdings (Private) Limited, the Singaporean government's investment arm. In addition to the new shares issued for sale to its parent company, China Eastern will raise a total of HK$11.34 billion ($1.46 billion) in the proposed transaction. Trading in China Eastern's shares is expected to resume today in Hong Kong and Shanghai after being suspended in late May. According to the agreement, China Eastern will issue a total of 2.985 billion new H shares for sale to the Singaporean companies at HK$3.8 ($0.49) each, representing a 1.9 percent premium on the closing price of HK$3.73 ($0.48) on May 21. The company's A-share price closed at 9.6 yuan ($1.27) on that day. China Eastern's parent company, China Eastern Airlines Group, has agreed to buy 1.1 billion new H shares, while Singapore Airlines will take 1.235 billion and Lentor will purchase 649 million. After the deal, China Eastern Group's holdings of China Eastern's A shares will drop from 59.7 percent to 37 percent, while its H-share stake will increase to 14 percent. Singapore Airlines and Lentor will respectively own 15.7 percent and 8.3 percent of China Eastern. According to the agreement, the two airlines will carry out comprehensive business cooperation, covering air routes, flights, operations, service, procurement, marketing and training. "We chose China Eastern as our strategic partner because the networks of our two airlines do not have much duplication and China Eastern has a big domestic network, especially in Shanghai, China's financial hub," Singapore Airlines Chairman Stephen Lee said at yesterday's press conference. Luo Zhuping, board secretary of China Eastern Airlines, said yesterday that the strategic cooperation will help improve the company's capital structure and financial position. "The liability/asset ratio of China Eastern is expected to fall from 95 percent to 80.2 percent," said Luo. "The net asset value per share is expected to increase from 0.62 yuan (8 cents) to 1.8 yuan (23 cents), close to the average level of domestic airlines," he added. Singapore Airlines has the right to nominate two persons to China Eastern's board of directors, while Temasek will have the right to appoint one person to the board, according to the agreement. "We will assign a total of 12 people to China Eastern," said Kwa Chong Seng, deputy chairman of Temasek. |
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