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Sichuan mining firm flies off with 75% aviation stake

By Wang Wen in Beijing and Li Yu in Chengdu | China Daily | Updated: 2013-02-20 10:01

Leshan Heima Mining Co, a privately owned mining company in Leshan city, Sichuan province, has spent 15 million euros ($20 million) on a 75 percent stake in Lisa Airplanes, a French aircraft builder.

"The acquisition was achieved in early February and the company plans to move the production lines to China in two or three years, if the general aviation industry develops well in China," said Deng Gang, head of the foreign economic cooperation division of the Leshan commerce bureau.

Leshan Heima Mining Co, which operates in the phosphate rock-trading business, declined to comment, as it wants to keep a low profile on the acquisition, Deng said.

Leshan Heima made the acquisition through its subsidiary in France.

"The company used self-raised funds to pay for the acquisition," Deng said, although its registered capital is only 530,000 yuan ($84,850).

Observers said the small amount of registered capital will not block the acquisition, as the firm's total assets are more important for an acquisition.

But the limited amount of registered capital means the company has low-risk resistance capacity, which may have an adverse effect on its overseas purchases, said Wang Zhile, president of the Beijing New Century Academy on Transnational Corporations.

Lisa Airplanes was established in 2004 and focuses on light-sports aircraft manufacture. It entered court-supervised receivership on July 30 after its investors failed to fulfill a financing commitment, the company said in August.

Leshan Heima will help the aircraft manufacturer build one or two production lines in France, said Deng.

Chinese private capital has been drawn to the general aviation industry in recent years, with the central government setting a development target for the industry in 2012.

Annual flight hours by the general aviation sector are set to rise from 502,700 hours in 2011 to 2 million hours by 2020.

The easing of regulations on low-altitude air space is expected to start by 2015 and be completed by 2020.

Gao Yuanyang, director of the general aviation industry research center at Beihang University, hailed the acquisition "good news" for the growth of China's general aviation business, with some private enterprises actively seeking advantageous positions in the market.

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