Oasis boss used stock as security for US$10m loan

Cash was needed to meet airline's urgent needs, says chairman

The chairman of Oasis Hong Kong Airlines has admitted he put up his shares in the company to secure a US$10 million loan in a desperate attempt to keep the carrier afloat.

'The only purpose for the loan was to meet the urgent cash needs of the airline. The entire US$10 million was put into the airline by the loan company directly,' the Reverend Raymond Lee Cho-min said by email in response to questions filed by the South China Morning Post.

Mr Lee, who controls about 60 per cent of the airline, denied the loan was for his personal use.

Property developer Cheung Kong (Holdings), controlled by Li Ka-shing, said on Thursday it had provided a loan 'to persons connected to Oasis Hong Kong Airlines'. Cheung Kong is neither a shareholder nor creditor of Oasis.

Pledging shares to secure a loan that has not been repaid means the shares become the assets of the creditor. If the shares do not yield the loan amount or become worthless, the creditor will usually require other personal guarantees. A creditor can also sue to recover the money.

Mr Lee is also chairman of Oasis Development Enterprises. The group of property development and management companies boasts a portfolio of commercial and residential buildings in Boston and a property in Las Vegas that is leased to Wells Fargo Bank, the fifth largest bank in the United States.