Cathay to sell 12.4pc of HAECO to its major shareholder Swire

HONG KONG's Cathay Pacific Airways announced plans yesterday to sell 12.45 per cent of its maintenance unit, Hong Kong Aircraft Engineering Company Limited (HAECO), for HK$1.9 billion (US$245.1 million) to Swire Pacific, which already holds 42 per cent of the airline.

"The transaction will bring clear advantages for all parties concerned," said Cathay chairman Christopher Pratt, who is also chairman of Swire Pacific and HAECO.

Cathay CEO Tony Tyler told a press conference at Pacific Place yesterday that said the airline would retain 15 per cent of HAECO to see that the airline is taken care of and still has influence.

"We are all part of the same family and it is important to see that the relationship between Cathay and HAECO, which is our maintenance department, does not change," Mr Tyler said.

While building cash reserves in the global downturn was the purpose of the transaction, Mr Tyler dismissed speculation that Cathay was considering a share sale of its own stock to raise capital. "We are not ruling it out, but it is not part of our plans," he said.

"The sale of part of our HAECO stake will provide funds that will strengthen our balance sheet. At the same time it affirms Swire Pacific's long-term commitment to Cathay Pacific and HAECO in particular, and to Hong Kong aviation in general," he said.

In accordance with Hong Kong stock exchange listing rules, the transaction is subject to the approval of Cathay Pacific's independent shareholders. If approved, Cathay's share of HAECO will decrease from 27.45 to 15 per cent, while Swire Pacific's stake will rise from 33.52 to 45.96 per cent.

A month ago, Air China, Cathay, CITIC Pacific and Swire Pacific announced that CITIC was to sell a 12.5 per cent in Cathay to Air China for HK$6.3 billion and sell two per cent to Swire Pacific for HK$1.01 billion at the same HK$12.88 share price. Thus, Air China's stake in Cathay Pacific increased from 17.49 per cent to 29.99 per cent while Swire's increased from 39.97 per cent to 41.97 per cent.

(Source:www.schednet.com)