JOHN SWIRE & SONS LTD
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From Sir Adrian Swire
Chairman
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SWIRE G
15th July, 1992.
MAN
The Rt. Hon. Douglas Hurd, CBE, MP,
Secretary of State for Foreign & Commonwealth Affairs, HD for a draft SAS replypt
Foreign & Commonwealth Office,
Downing Street,
LONDON, SW1A 2AL.
Dear
Songlas,
Mr Buste
Die
Cathay Pacific Airways
yes
Rs low. Goodland PSL Pus
Sir J Goles
dun. Hum
Special Ads
FED
AMA
When we met in February to debate Hong Kong issues, I mentioned that we were holding private discussions with the Chinese, at a senior level, in the expectation that they would be prepared to acquire a 10% holding in Cathay Pacific Airways, on top of the present CITIC holding of 12.5%. This has now been achieved with CNAC (a subsidiary of CAAC) and China Travel Service (CTS) acquiring 5% each at a total cost of some £230 mn. The sellers were the Hongkong & Shanghai Bank, who disposed of their holding very reluctantly at Swire's request and who were most helpful throughout. All of us appreciated that a deal of this kind was in the best interests of Hong Kong and of Cathay Pacific Airways.
We have known for some time that broad approval for this deal had been given by the State Council and by Li Peng. The mechanics, however, mainly because of price considerations, proved exceptionally difficult and delicate. At the end of the day, however, Peking did what they said they would do and I think, against all the current problems on the aviation front (connected with the airport, air service agreements and so on) that this pragmatic move on Peking's part is a very encouraging sign for the future of Hong Kong as a whole. I hope too that it may help to break the ASA separation logjam within the JLG.
The mainland Chinese now have a 22.5% shareholding in Cathay Pacific, with 51.85% in the hands of Swire Pacific, and the remaining shares in public hands. We (Swires) therefore continue to control the airline and to manage it. We are satisfied, certainly for the time being, with this shareholding structure.
The move has been very well received and commented upon throughout Hong Kong; and I thought you might be interested to have this background before your visit at the end of this month.
"he
c.c. The Rt. Hon. John MacGregor, OBE, MP, Secretary of State for Transport
Yours
era
Aduan
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