ASEAN KEY DESTINATIONS
January 11, 2008
Singapore Airlines (SIA) quickly expressed its disappointment over the shareholders' rejection of its investment in China Eastern Airlines (CEA).
The Singapore flag carrier said in a statement that "Singapore Airlines is disappointed that the proposed transaction involving an equity stake in China Eastern Airlines did not receive the required level of support from independent shareholders at today's EGM (extraordinary general meeting)."
On Tuesday afternoon in Shanghai, CEA's minority shareholders voted against selling 24 percent stake for 7.2 billion Hong Kong dollars (about 923 million U.S. dollars) at 3.8 Hong Kong dollars per share to SIA and Temasek Holdings, Singapore's government-related investment firm.
The China Eastern-SIA deal has been baffled by another Chinese airline giant Air China. Its parent company China National Aviation Holding Company, announced before the shareholders' meeting that it will make a counter-offer at least 32 percent higher than that of SIA's.
SIA maintained in the statement that its offer represents a "full and fair value for the equity injection to recapitalize the airline", and noted that the transaction "has also been approved in accordance with relevant laws and regulations."
It reiterated, "The proposal is for a long-term strategic relationship with a willing partner."
And its proposal would have brought international expertise from SIA's board and management to China Eastern, which, SIA said, would have helped CEA meet future challenges in a competitive aviation environment in China.
However, SIA said it respected the shareholders' vote and will continue to support the building of a relationship with China Eastern.
On its part, Temasek Holdings said it remains open to future opportunities which make commercial sense, and that fall within Temasek's overall investment framework.