China Eastern Airlines, COSCO Group, Concord Pacific Limited and Singapore Cargo Airlines stated (20-Dec-2010) they have increased their respective capital in China Cargo Airlines based on its appraised value as at 30-Jun-2010. At the same time, China Cargo Airlines and Shanghai Cargo Airlines signed an asset acquisition pursuant to which the core cargo air transportation business and related assets of Shanghai Cargo Airlines shall be acquired by China Cargo Airlines. China Cargo Airlines also entered into a CNY387 million (USD58 million) agreement to acquire Great Wall Airlines. Details include:
- Capital increase: The capital increase of China Cargo Airlines amounts to CNY2.05 billion (USD307 million), among which CNY1.0 billion (USD156.6 million) is contributed by the China Eastern, CNY348.5 million (USD52.2 million) is contributed by COSCO Group, CNY328 million (USD49.1 million) is contributed by Concord Pacific Limited and CNY328 million is contributed by Singapore Cargo Airlines;
- Ownership structure China Cargo Airlines: Was 70% owned by China Eastern Airlines and 30% owned by China Ocean Shipping (Group) Company (COSCO). Following an investment agreement signed in Shanghai on 20-Dec-2010, the parties will seek approvals for China Cargo Airlines to be re-organised into a limited liability Chinese-foreign equity joint venture company. SIA Cargo’s investment in the re-organised company will amount to CNY328 million. Upon the completion of the capital increase, the proportion of shareholding in China Cargo Airlines will be owned as to 51% by China Eastern, 17% by COSCO Group, 16% by Concord Pacific Limited (an EVA Airways affiliate company) and 16% by Singapore Cargo Airlines;
- Registered capital: Its registered capital will increase to CNYB3 billion following the transaction;
- Name: Upon completion of the capital increase, China Cargo Airlines will be referred to as the “New China Cargo Airlines”;
- Shanghai Cargo Airlines/Great Wall Airlines: Upon becoming a Sino-foreign equity joint venture, China Cargo Airlines will acquire the core air cargo transportation business and related assets (including all assets, liabilities, aircraft, personnel, routes and contracts) from Shanghai Cargo Airline and Great Wall Airlines;
- About China Cargo Airlines: It is a Shanghai-based company with an initial registered capital of CNY950 million. China Cargo Airlines operates a fleet of 13 aircraft comprising three A300F, two B747-400Fs, three B777Gs and five MD-11Fs. Its global route network extends to 26 destinations outside Shanghai, covering major cargo ports in China, Asia, Europe and the US; [more - SIA Cargo] [more - China Eastern] [more - China Eastern/Great Wall]
China Eastern is consolidating freight operations following the takeover of Shanghai Airlines and is seeking to strengthen its presence in Shanghai. The move will help the carrier compete with a Cathay Pacific and Air China cargo JV scheduled to commence service by 31-Dec-2010.