Hong Kong tycoon's son may save Air Canada
( 2003-09-29 15:24) (FT.com)
Victor Li, elder son and heir apparent to Hong
Kong tycoon Li Ka-shing, on Sunday confirmed he had been shortlisted by Air
Canada to help it emerge from bankruptcy by buying C$700m ($517m) of fresh
equity.
Speaking in Beijing, where he had been attending a meeting between
Chinese authorities and business leaders over the weekend, Mr Li said he had
submitted a letter of intent to provide the financing but stressed that many
issues were still to be resolved.
Mr Li, deputy chairman and managing director of Cheung Kong (Holdings),
flagship of the Li family ports-to-telecoms empire, said that he was making the
bid in a personal capacity, echoing the airline's statement on Friday that his
investment would come from "personal financial resources".
The airline said on Friday that it would enter into detailed negotiations
with both Mr Li and Cerberus, a New York-based asset management firm, to secure
the financing, following an international competition that drew expressions of
interest from Texas Pacific Group, the US buyout group, and Toronto-based buyout
specialist Gerry Schwartz. "This is the latest and hopefully one of the last
cornerstones in our restructuring," said Calin Rovinescu, Air Canada's chief
restructuring officer.
Also, Air Canada said both proposals envisaged "co- investment by creditors
through a rights offering which would increase total proceeds to C$1bn".
The company said unsecured creditors, including bondholders and other
financial institutions, with total estimated claims of C$8bn to C$10bn, would
receive about 40 to 65 per cent of the airline's fully diluted equity on
restructuring.
The fact that Mr Li is a Canadian citizen could be important in the
negotiations as Canadian law prevents foreigners from owning more than 25 per
cent of the voting shares in a Canadian airline. Like many wealthy Hong Kong
citizens, Mr Li, who is primarily based in Hong Kong, became a Canadian citizen
before the 1997 handover of Hong Kong to China. His family also made significant
investments in Canada before the handover, including in Vancouver real estate.
Mr Li is known for being intensely private as well as a tough negotiator. The
move by Mr Li is a rare foray into the airline sector by the Li family, which,
through its businesses, also own a minority stake in China Southern Airlines,
according to reports.
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