China's CNAC to Become Largest Dragonair Shareholder
Apr. 29, 1996
HONG KONG (AP) _ State-owned China National Aviation Corp. is buying a 35 percent stake in Hong Kong-based Dragonair and abandoning plans to launch its own carrier once the British colony returns to Chinese rule.
Dragonair's three major shareholders said Monday that the $253 million CNAC interest the largest single stake.
Beijing-backed investment company CITIC Pacific Ltd. and the combined shareholding of Swire Pacific Ltd. and its subsidiary, Cathay Pacific Airways Ltd., are each selling equal amounts of stock to CNAC.
An additional 0.55 percent stake in the airline will be sold to CNAC by Hong Kong businessman K.P. Chao for $3.8 million.
Dragonair is one of the territory's two passenger carriers, along with Cathay.
CNAC began negotiating last year for a stake in Dragonair, which flies lucrative routes between the territory and China. Once the Sino-British Joint Liaison Group grants final approval, Dragonair will also fly routes to Taiwan.
In a separate transaction, Swire will see its majority 52 percent stake in Cathay diluted to 44 percent after the territory's flag carrier sells $808 million of new shares to conglomerate CITIC.
The issue will boost CITIC's holding in Cathay to 25 percent from its current 10 percent, allowing CITIC to make ``a greater contribution to key policy issues.''