Mainland airline group Grand China Air, partly owned by American George Soros, is under pressure to terminate a long-awaited Hong Kong flotation after two of the company's financial sponsors walked away from the proposed share sale, according to sources.
The carrier originally mandated three investment banks to handle a share offering in Hong Kong in 2006 and hoped to sell shares in 2007 to tap the initial public offering boom prevailing at the time.
But its application has been held up by the firm's weak balance sheet and the adverse environment for airlines as a result of high oil prices and tumbling global economic growth, said the sources.
The application has now been on file with the stock exchange for at least three years.
According to a source familiar with the listing bid, joint sponsors UBS and Guotai Junan Capital have dropped plans to help Grand China with the proposed US$1 billion initial public offering in Hong Kong, citing concerns that the mainland airline is unlikely to deliver a strong enough earnings performance and balance sheet in the next few years to attract investors to its share issue.
A third sponsor, Goldman Sachs, is likely to leave the syndicate shortly and a source close to the bank said promoting the issue would be tough in the present environment.
