Swire Pacific Ltd canceled plans to buy out Hong Kong Aircraft Engineering Co (Haeco) after failing to get enough support from shareholders of the plane-maintenance provider.

Investors owning about 15 percent of Haeco accepted Swire Pacific's HK$105 per share offer, Swire Pacific said in a Hong Kong stock exchange statement on Tuesday.

Although the investors' move raised Swire Pacific's stake to 76 percent, it fell short of the required 90 percent that allows for the compulsory acquisition of outstanding shares.

The company has reportedly stated no plans to extend or revise its initial offer.

Swire Pacific offered a total of HK$9.4 billion ($1.2 billion) to buy outstanding shares of Haeco, as a rebounding global economy revives demand for air travel and plane repairs. Affiliate Cathay Pacific Airways Ltd sold its 15 percent stake in the maintenance company at the offer price to help raise funds for planes and a new air-cargo terminal in Hong Kong.

Swire Pacific's offer was 25 percent higher than the Haeco closing price on June 4, before the offer was announced. The company owned 46 percent of Haeco before the offer.

Haeco rose 0.3 percent to close at HK$105 in Hong Kong trading on Tuesday, before the Swire Pacific statement. The company operates facilities in Hong Kong, the Chinese mainland, Singapore and Bahrain, and has ventures with Boeing Co, Honeywell International Inc and Goodrich Corp, among others.

The maintenance company will seek a three-month waiver from a stock exchange rule that forces listed companies to have at least 25 percent of their shares freely traded.

Bloomberg News

(HK Edition 07/28/2010 page3)