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China Aviation Oil ready for a comeback after loss
(bloomberg.com)
Updated: 2006-02-05 21:14
http://www.iht.com/articles/2006/02/05/bloomberg/sxcao.php?rss
Shares of China Aviation Oil (Singapore), suspended since November
2004 after the company's $550 million trading loss, will resume trading at the
end of March, said Gu Yanfei, head of a restructuring task force.
A meeting will be held in the first week of March, when shareholders will
vote on the issuance of shares to the new investors BP and Temasek Holdings as
well as to creditors, Gu said Friday. They will also approve the new board,
which will then appoint a chief executive, she said.
"What we are looking at is the management and the governance of the company
going forward," Gu said after a meeting with shareholders, the first since
trading of the stock was halted.
China Aviation Oil's derivatives-related loss was Singapore's biggest since
the former trader Nick Leeson lost $1.4 billion at Barings in 1995. Reports by
PricewaterhouseCoopers, the accounting firm that examined China Aviation Oil's
losses on behalf of Singapore's stock exchange, said the company overrode risk
controls and failed to follow correct accounting procedures.
"It's a terrible loss, but something is better than nothing," David Gerald,
chairman of the Securities Investors Association of Singapore, said of the
restructuring. "It's a long haul and it will take time for the company to get
back in the black."
Gerald has been asked by the task force to meet with the State-Owned Assets
Supervision and Administration Commission of China on what can be done for
shareholders. Gu said a date has yet to be fixed for that meeting. China
Aviation Oil is a unit of a Chinese government-owned company.
As part of the restructuring before the issuance of new shares to BP and
other investors, China Aviation Oil's stock will be reduced to one share for
every five held. "My concern is whether minority shareholders will get a fair
share," said Mark Tan, who holds 10,000 shares bought about two months before
the stock was suspended. "But we'll just have to live with it."
The company, which is China's dominant jet-fuel
importer, avoided bankruptcy when creditors in June agreed to write down some of
its debt. BP, Europe's biggest oil company, will get two board seats with its
investment, Gu said.
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