China National Aviation Holding, parent company of Air China, will vote against a proposal to sell a 24 percent stake in rival carrier China Eastern to Singapore Airlines (SIA) and the Singapore government-owned investment firm Temasek Holdings Ptd Ltd, the Wall Street Journal reported, citing an unidentified source. China National Aviation, also a minority shareholder in China Eastern, has said in the 7.2 bln hkd stake sale to SIA and Temasek, “does not reflect the fair value of China Eastern,” according to a statement seen by the newspaper.
The statement also says the terms of the agreement, including anti-dilution rights and a non-competition clause, are unfair to other China Eastern shareholders.
China Eastern has said that China National Aviation is unable to block the deal, which needs to be approved by holders of at least two-thirds of China Eastern’s outstanding Hong Kong-listed shares and two-thirds of its Shanghai-listed shares.
Shareholder meetings are scheduled for next Tuesday. China Eastern and its parent, China Eastern Air Holding Co, will not be allowed to vote.