Wed, Jan 12, 2005 - Page 10 News List

Government mulling sale of China Airlines stake to overseas investors

BLOOMBERG

China Airlines' shares may be sold to overseas investors as the government considers reducing its controlling stake in Taiwan's largest carrier to less than 50 percent.

Taiwan International Securities Corp, which is advising the airline, is drafting share sale options for China Air's board to consider, said C.C. Lin, secretary-general of China Aviation Development Foundation, which holds the government's stake. No board meeting has been scheduled to discuss the proposals, he said.

"We've thought about selling shares overseas," Lin said by telephone yesterday. "It's one of the possibilities that needs to be reviewed by the board."

The government is preparing to sell assets, including shares in China Steel Corp, Taiwan Tobacco & Liquor Corp and other companies to help plug a budget deficit that was forecast to reach a record NT$304 billion (US$9.5 billion) last year.

The government also needs to pay interest on record national debt of more than NT$3 trillion.

The government in 2003 postponed plans to sell half its stake in China Airlines because the stock price at the time lagged the target price of NT$17 a share.

"The government wants to sell China Air stocks at a better price" to help make up for the budget deficit, said D.C. Wang, an analyst at Yuanta Core Pacific Capital Management Co. "We're not sure the sale will happen this year."

The aviation development foundation now owns 68 percent of China Airlines, down from about 70 percent last year, Lin said.

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