In a rare movement, China Eastern Airlines said it foresaw "a gloomy results from a vote on the proposed sale of shares to Singapore Airlines and Temasek."

 

In an email delivered to China Daily this morning, China Eastern said that the sales proposal will "very likely be put off temporarily".

 

According to the email, a vast number of shareholders that previously supported the deal have "changed their minds" after China National Aviation Corp (CNAC), Air China's parent company, said on Sunday it plans to make a counter offer of HK$5 per share for China Eastern Airlines.

 

The counter offer is a third higher than the HK$3.8 offered by Singapore Airlines if the China Eastern-Singapore Airlines deal is rejected.

 

In addition, CNAC, which owns a 12.07 percent stake in China Eastern, is expected to vote against the deal, and as such the deal is not likely to pass, said China Eastern in the statement.

 

The shareholder meeting to discuss the deal will be held at 1:30 pm today as scheduled. Trading of both A and H shares of China Eastern is suspended today.

 

China Eastern said in a statement to the Shanghai Stock Exchange today that the company has not received any "formal" similar proposal from other suitors.

 

In a statement last night, China Eastern challenged the authenticity of the proposal raised by CNAC and suggesting CNAC hopes to block cooperation with Singapore Airlines.

 

(China Daily January 8, 2008)