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China East Star Airlines gets offer from investors

Mon Jun 22, 2009 11:19pm EDT

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SHANGHAI, June 23 (Reuters) - East Star Airlines, a debt-ridden privately held Chinese carrier, said it will sell at least an 85 percent stake in the firm to help it make a comeback.

East Star will get at least 500 million yuan ($73.2 million) from outside investors, led by little known Shanghai Yujie Industry Co, the company said in a statement late on Monday. No timetable or details of other investors were available.

East Star had previously rejected a takeover offer by Air China's (601111.SS) state parent, and was grounded by the Chinese aviation regulator in March due to operational difficulties.

The small carrier has filed for bankruptcy protection with a local court in Wuhan, its home base. It has total debt of more than 500 million yuan, Wu Yue, a lawyer hired by the company, told reporters at a news conference.

Its main creditors include the parent of China Aviation Oil (Singapore) Corporation Ltd (CNAO.SI), Wu said. ($1=6.835 Yuan) (Reporting by Fang Yan and Jacqueline Wong)



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