Aviation article(s)
February 22, 2023

SATS Ltd. (SATS) announced it had received the necessary approvals from all jurisdictions for the acquisition of Worldwide Flight Services (WFS) and that it will undertake a renounceable, underwritten rights issue to raise gross proceeds of approximately S$798.8 million (US$595.16 million) to partially fund the acquisition.


In an announcement, SATS said entitled shareholders would be allotted rights to subscribe for 323 rights shares for every 1,000 existing shares held as at the record date at the price of S$2.20 per rights share, representing a discount of 16% to TERP.


The record date for the rights issue will be at 5.00 p.m. on March 2, 2023.


It added that the rights issue would commence when an offer information statement is lodged with the Monetary Authority of Singapore on or around March 2, 2023.


On September 28, 2022, SATS announced that it had signed a sale and purchase agreement to acquire the world's leading air cargo company, WFS, for a total cost of approximately S$1,820 million (US$1.356 billion).


The approval of SATS' shareholders for the acquisition was sought and obtained at the SATS' extraordinary general meeting held on January 18, 2023. The acquisition received 96.8% approval from voting shareholders during the extraordinary general meeting.


SATS said then that it would fund the estimated total cost of the acquisition of approximately equivalent to S$1,820 million through: net proceeds from the rights issue; a three-year Euro denominated term loan equivalent to approximately S$700 million from SATS' principal bankers.


It will also utilise cash from the company's existing cash balance to fund the remainder of the Total Acquisition Cost Venezio Investments Pte. Ltd, an indirect wholly-owned subsidiary of Temasek, has given an irrevocable undertaking to subscribe for its pro rata 39.68% entitlement to the rights issue.


WFS said no commission or fee would be paid to Temasek or Venezio in connection with the irrevocable undertaking.


Meanwhile, the remaining 60.32% of the rights issue will be underwritten by the banks — DBS is the Lead Financial Adviser for the rights issue and, together with BofA and Citi, are the Joint Financial Advisers and Underwriters.


OCBC and UOB are Co-Lead Managers for the rights issue.


In addition, SATS Directors who are also SATS shareholders intend to subscribe for their pro rata entitlements


"SATS believes the funding plan provides a prudent and balanced mix of sources and presents shareholders with an optimal value proposition for the WFS acquisition," it said in a statement.


It added that the Group believes that it will be able to deleverage and meet its debt commitments with the potential free cash flows that will be generated from the combined business.


WFS acquisition to close on April 3, 2023


In accordance with the general mandate granted by SATS' shareholders at the Annual General Meeting held on July 22, 2022, no shareholder approval is required for the rights issue.


Meanwhile, SATS said with all of the regulatory conditions for the transaction having been satisfied, SATS' proposed acquisition of WFS is expected to close on April 3, 2023 and will create a "pre-eminent global air cargo handling platform."


"It will allow SATS to gain leading positions in strategic hubs connecting key trade lanes across North America and Europe, complementing its operations in Asia Pacific," it added.


SATS noted that acquiring WFS will also enable SATS to expand its capabilities to meet growing demand from customers wanting to transport higher-value goods, including pharmaceutical products, vaccines and specialised cargo, on a global scale.


"WFS will provide SATS with an industry-leading platform from which we can drive future growth and secure greater earnings resilience. The renounceable rights issue allows all shareholders the opportunity to participate in SATS’ long-term growth," said Kerry Mok, PCEO of SATS.

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