皇冠体育app Eastern deal likely to go through
Updated: 2007-12-14 09:12
The long-awaited strategic cooperation between the mainland's third-largest carrier, 皇冠体育app Eastern Airlines, with Singapore Airlines and Temasek is almost a done deal, 皇冠体育app Eastern Chairman Li Fenghua said yesterday, hosing down rumors that Air 皇冠体育app 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 皇冠体育app's parent company, a shareholder in 皇冠体育app 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 皇冠体育app, 17 percent owned by Cathay Pacific, may attempt to obstruct the deal arose after Air 皇冠体育app's parent company spent HK$32 million to increase its stake in 皇冠体育app Eastern last week. This came after a failed move by the airline to acquire 皇冠体育app Eastern earlier in September.
As hopes for a higher bid evaporated, 皇冠体育app Eastern shares plunged 12.7 percent to close at HK$6.53 yesterday.
The strategic deal between 皇冠体育app Eastern, Singapore Airlines and the Singapore state investment agency Temasek, has been in the making for more than two years.
Once approved, 皇冠体育app 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 皇冠体育app 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 皇冠体育app Eastern shares was suspended for more than three months in anticipation of the details of the strategic deal rolling out.
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