Cathay Capital Injection | Chen Maobo: The government has no intention to become a long-term shareholder and seek professionals as observers

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Written by: Zhang Jiamin

2020-06-13 11:28

The new pneumonia epidemic lasted for many months, and customs clearance measures hit the aviation industry. The government has recently invested in Cathay Pacific to save the country. In its 39 billion yuan capital restructuring plan, in addition to issuing preferred shares and transition loans, it has received at least 27.3 billion yuan from government financing.

The Financial Secretary Chen Maobo said today (13th) on the commercial channel "Political and Economic Saturday" that the capital injection takes into account the importance of Cathay Pacific in Hong Kong's aviation industry. He also said that the action is an investment and a reasonable return. He also pointed out that the Hong Kong government does not intend to be a long-term shareholder, and to arrange for observers to protect interests, personnel will not be government officials.

The Financial Secretary Chen Maobo stated that he only invested in Cathay Pacific in order to maintain Hong Kong's status as an international aviation hub. (Profile picture / Photograph by Zheng Zifeng)

The Financial Secretary Chen Maobo said on the show that the capital injection considers that the aviation industry is a systemic key industry, that is, it will promote the development of other industries, including tourism, trade, and even involve transportation of vaccines and medicines. According to consultancy studies, the aviation industry accounts for local GDP grew by 4.6% to 9% and involved 300,000 jobs.

Cathay Pacific is important in maintaining Hong Kong's aviation hub. Among the four airlines in Hong Kong, Cathay Pacific Group has accounted for three of them. If it compares its scale with that of Hong Kong Airlines, Cathay Pacific may not be able to take over if it fails to operate Hong Kong Airlines. He also said that Hong Kong Airlines had had financial difficulties earlier. On the contrary, Cathay Pacific operated well before the pneumonia epidemic. He believed that the cost of the reconstruction would be greater once it fell down.

Regarding the practice of using the land fund as being bypassed by the Legislative Council, Chen Maobo said that the capital injection is an investment and has a reasonable return. He also said that the practice is authorized by the Legislative Council, so there is no bypass of the Legislative Council.

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The government has no intention of becoming a long-term shareholder of Cathay Pacific

When meeting with reporters after the show, Chen Maobo said that the government has no intention to become a long-term shareholder of Cathay Pacific. One of the capital injection conditions is that Swire Pacific needs to be a controlling shareholder of Cathay Pacific before paying off interest. Redeem preferred stock as soon as possible, so that the government can exit. He also said that in order to protect the interests of shareholders as an observer, the relevant personnel will not be government officials, but will identify senior professionals and business leaders.

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Cathay Pacific Financial Secretary Chen Maobo