Pan American Holdings completed its signing protocol in a Letter of Intent with Hainan Airlines to invest between US$60 million and US$100 million, the equivalent of an 11 to 18% stake, in the airline's new parent company Grand China Airlines.

This protocol included agreement for a down payment and is pending approval of the Ministry of Commerce in Beijing.

If the LOI is approved by the Government, Pan American Holdings will become at least the second largest foreign investor in the new Chinese airline. The largest single investor currently is American Aviation LDC, a George Soros-owned investment vehicle. Bharat Bhise, Director of Pan American Holdings, indicated that full payment of the purchase would be complete by the end of 2006.

According to Hainan Chairman and CEO, Chen Feng, the decision to sell a percentage of Grand China Airlines enables Hainan to better its balance sheet and, in time, to raise funding for its planned listing on the Hong Kong stock exchange.

Grand China Airlines, owner of Hainan Airlines, will also own Hainan's other subsidiaries: Xinhua Airlines, Changan Airlines and Shanxi Airlines. Another pending acquisition is CR Airways, a Hong Kong-based carrier which will likely be part of GCA. Hainan Airlines is based in Haikou, Hainan, People's Republic of China.

It is publicly traded on the Shanghai Stock exchange and has Chinese A shares and foreign B shares, as well as Hong Kong H shares. It is the largest non-government airline in China, and the fourth largest airline of China, including the big three Government airlines China Eastern, China Southern and Air China.

Hainan operates a scheduled domestic services network with a fleet of 115 aircraft that includes Boeing 737 and 767 variants, as well as Airbus A319-100 and Boeing 777 and 787 aircraft on order. International flights were launched in 2005.

A former director of Hainan Airlines and now a senior advisor to top management, Bhise is the CEO of Bravia Capital Partners in New York. In 1995, Bhise led the effort for the Soros investment vehicle to purchase a stake in Hainan Airlines, which positioned Soros as the largest investor in the airline at 25 percent. After subsequent share offerings, the Soros-controlled percentage was reduced to 14.8 percent. This transaction was completed within Bhise's role as President of C-S Aviation, at that time.