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China Eastern deal: Beijing denies pressure
Sun, Jan 06, 2008 The Straits Times
SHANGHAI - CHINA'S government has denied it is pressing shareholders to approve a HK$7.16 billion (S$1.32 billion) investment by Singaporean companies in China Eastern Airlines, though it said it supports such deals in principle. A two-sentence statement by the state-owned Assets Supervision and Administration Commission leaves in doubt the outcome of shareholders' meetings on Tuesday to vote on the investment. 'Chinese central government-owned companies conduct business independently and in line with market principles,' said the commission, which has ultimate control of China Eastern and other big state-run companies. The official Xinhua news agency said this was a denial of speculation earlier in the week that Beijing was pressing China Eastern's minority shareholders - who will meet in Hong Kong and Shanghai - to approve the Singaporean investment.

Significantly, the commission's statement also said: 'We support the state-owned giants having overseas strategic investors.'

Some analysts believe the Chinese government may now be unwilling to take a public stance on the Singaporean deal because leaning towards either camp could be embarrassing.

Singapore Airlines and Singaporean investment agency Temasek signed an agreement in November to buy 24 per cent of China Eastern, China's third biggest carrier, for HK$7.16 billion. The deal received Chinese government approval.

China National Aviation Corp, which owns 12 per cent of China Eastern's Hong Kong-listed shares, said on Thursday it would make a counter-offer for China Eastern if Tuesday's shareholder meetings rejected the Singaporean deal.

REUTERS