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China Aviation Oil ready for a comeback
(Agencies)
Updated: 2006-02-06 09:58

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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