Source: The Standard Author: Mandy Lo 12/24/2007
Subject Concerned: Airlines
On December 23, China Eastern Airlines chairman Li Fenghua said he had not received any objections to the carrier's deal with Singapore Airlines.
As he wound up a week-long roadshow aimed at soliciting shareholder support for next month's vote on the transaction, he said holders of 12 million A shares are in favor of the deal.
"I am confident, the deal will be approved by shareholders," he said in Shenzhen, the roadshow's last stop.
Director Luo Zhuping said he could not say at this stage how many shareholders overall will support the transaction.
Some overseas shareholders have been contacted by phone and the decision of others is not yet known, he added.
The mainland media had reported that China National Aviation Corp, the parent of Air China, may offer HK$7.85 per share to acquire a higher stake in China Eastern.
But Li denied the report, saying the media had cooked up the story.
"I met the chairman of Air China Li Jiaxiang in Beijing [last week] and the meeting atmosphere was harmonious and he understood why the price was HK$3.80 per share," Li said.
Referring to criticisms that HK$3.80 per share is too low, Li said there is a three-year lock-up period and the price should not be compared with shares changing hands in the market.
H shares of China Eastern closed at HK$6.15 on December 18, before the roadshow went to Beijing, and then gained about 10 percent to HK$6.76 on December 21. Li said speculators are driving up the share price. CNAC increased its stake in China Eastern from 11.02 percent to 12.07 percent on November 29.
Li said this was merely an investment decision.
SIA and parent Temasek Holdings have agreed to take a 24 percent stake in China Eastern in September for US$918 million (HK$7.16 billion).
Shareholders of China Eastern are set to vote on the deal at an extraordinary general meeting on January 8.
Singapore Airlines said this month it will not raise its bid. Li said the management team will continue to try to persuade shareholders even if the vote goes against the transaction.