ET-CHINA.COM TRAPPED IN LAWSUITS

AsiaInfo Services
07-28-2011
Et-china.com Trapped in Lawsuits

GUANGZHOU, Jul 28, 2011 (SinoCast Daily Business Beat via COMTEX) -- Two years ago, the merger of Yoee.com into Et-china.com International Holdings Ltd. shocked the whole online tourism market. However, in the past two years, the buyer was trapped in lawsuits, and Yoee.com, which has been operating for nearly ten years, was shut down on July 20, 2011.

Reporters find out that Yoee.com will not be simply shut down. By far, GZL International Travel Service Ltd. has sued Et-china.com, claiming for debts defaulted by the defendant. The debts were formed because of the jobbery of former CEO from Et-china.com. Yesterday, Yoee.com delivered dismissal wages to the first group of dismissed employees.

A person in the know reveals that Et-china.com planned to sell Yoee.com in May 2011. The intended buyer was Hainan Airlines Group (HNA). However, because of lawsuits involved by Et-china.com, the deal was put aside.

Yesterday, reporters telephoned the service hotline of Yoee.com and were told by operators that the Web site has suspended service like booking of air tickets and hotel rooms and car rental. Reporters further find out that the management team of Yoee.com has left their posts on the whole.

Yoee.com was founded in 2003 with investment from Beijing Foreign Enterprise Service Group Co., Ltd., a joint venture between Air China Limited (SHSE: 601111 and SEHK: 0753) and Foreign Enterprise Service Corporation (FESCO).

In March 2009, Et-china.com paid CNY 5 million in cash and 1.56 million shares for the acquisition of Yoee.com. Et-china.com unveils that the gross profits of Yoee.com have recorded CNY 8.7 million by the end of 2007.

Both Et-china.com and Yoee.com ranked ahead once in the domestic online tourism market. After their merger, their gross operating revenues totaled CNY 1.75 billion in 2008. It seems that they are challenging the leading status of Ctrip.com International Ltd. (Nasdaq: CTRP).

A person close to GZL tells reporters that Yoee.com has been responsible for operating the air ticket booking service of GZL. Yoee.com appropriated large amount of capitals from GZL under the management of former Et-china.com CEO. That is why GZL takes legal actions and sues Yoee.com to court.

Et-china.com is currently the controlling shareholder of GZL and diverges with the second largest shareholder Guangzhou Lingnan International Enterprise Group Co., Ltd. over the equity sale of GZL.

In 2006, Et-china.com boosted its stake in GZL to 52.39%. In June 2009, Kuoni Travel Group bought a 32% stake in Et-china.com and indirectly took helm of GZL.

In September 2010, Guangzhou Lingnan sued Et-china.com to a local court, accusing the defendant for violating bilateral agreement and changing the equity structure of GZL.

After being involved in lawsuits, the stock of Et-china.com suspended trading on the London Stock Exchange (LSE). Later, the company was de-listed from the capital market.

(USD 1 = CNY 6.44)

Source: www.163.com (July 28, 2011)

KEYWORD: GUANGZHOU INDUSTRY KEYWORD: Internet & Online Services & Media SUBJECT CODE: Internet & Online Services
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