SIAEC welcomes Hong Kong Airlines
SIA Engineering Company Limited (SIAEC) welcomes Hong Kong Airlines as new shareholder in Hong Kong Line maintenance joint venture
January 24, 2018
By PLA Editor
Air & Cargo Services air cargo Air Cargo Asia air cargo freight Air Forwarding air freight Air Freight Asia Air Freight Logistics air freighter air freighting Air Logistics Asia Air Shipping Asia airlines cargo airways cargo asia cargo news cargo aviation Hong Kong Airlines Malaysia Airlines Berhad SIA Engineering Company Limited SIAEC
Mainboard-listed SIA Engineering Company Limited (SIAEC) announced that it has, together with its joint venture partners Malaysia Airlines Berhad (MAB), PT Garuda Indonesia (Persero) TBK (GA) and Royal Brunei Airlines Sdn Bhd (RBA), collectively the Existing Shareholders, entered into an agreement with Hong Kong Airlines Ltd (HKA) for HKA to subscribe for new shares in Pan Asia Pacific Aviation Services Limited (PAPAS).
HKA is a full-service carrier based in Hong Kong and currently operates a fleet of 35 aircraft. HKA is a major customer of PAPAS and its entry as a shareholder will further strengthen PAPAS’ growth.
PAPAS is a Hong Kong-based joint venture between SIAEC (47.06 per cent), MAB (23.53 per cent), GA (17.65 per cent) and RBA (11.76 per cent), which provides a full suite of line maintenance, ramp handling and other ancillary services at Hong Kong International Airport.
Pursuant to the agreement between HKA and the Existing Shareholders, HKA will become a 15 per cent shareholder of PAPAS through a subscription of new shares (First Tranche). SIAEC’s stake in PAPAS will be 40 per cent upon completion of the First Tranche. Subject to the fulfilment of certain conditions, HKA has the right to further increase its stake in PAPAS to 30 per cent (Second Tranche).
The consideration payable in cash by HKA for the First Tranche shares is HK$21.7 million (about S$3.7 million) and the consideration payable in cash by HKA for the Second Tranche shares will be in the range of HK$23.5 million to HK$33.5 million (about S$4.0 million to S$5.7 million). The consideration was determined on an arm’s length basis, validated by an independent valuer appointed by PAPAS, which was based on discounted cash flow methodology. Completion of the First Tranche and the Second Tranche is further subject to the satisfaction (or waiver) of the conditions precedent contained in the agreement with HKA.
The transaction is not expected to have a material impact on the net tangible assets per share or earnings per share of SIAEC for the financial year ending 31 March 2018. None of the Directors of SIAEC has any interest, direct or indirect, in the transaction.