皇冠体育app

By Jin Jing (皇冠体育app Daily)
Updated: 2007-09-03 07:32

SHANGHAI: 皇冠体育app 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, 皇冠体育app Eastern will raise a total of HK$11.34 billion ($1.46 billion) in the proposed transaction.

Trading in 皇冠体育app Eastern's shares is expected to resume today in Hong Kong and Shanghai after being suspended in late May.

According to the agreement, 皇冠体育app 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.

皇冠体育app Eastern's parent company, 皇冠体育app 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, 皇冠体育app Eastern Group's holdings of 皇冠体育app 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 皇冠体育app 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 皇冠体育app Eastern as our strategic partner because the networks of our two airlines do not have much duplication and 皇冠体育app Eastern has a big domestic network, especially in Shanghai, 皇冠体育app's financial hub," Singapore Airlines Chairman Stephen Lee said at yesterday's press conference.

Luo Zhuping, board secretary of 皇冠体育app Eastern Airlines, said yesterday that the strategic cooperation will help improve the company's capital structure and financial position. "The liability/asset ratio of 皇冠体育app 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 皇冠体育app 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 皇冠体育app Eastern," said Kwa Chong Seng, deputy chairman of Temasek.