Singapore, 8 February 2018 – Singapore Technologies Engineering Ltd (ST Engineering) today announced that its aerospace arm, Singapore Technologies Aerospace Ltd (ST Aerospace), has signed a definitive agreement to divest 5% equity stake in ST Aerospace (Guangzhou) Aviation Services Company Limited (STA Guangzhou), a joint venture with Guangdong Airport Authority, to Japan Airlines Co., Ltd (Japan Airlines) for a consideration of US$7m (approximately S$9.2m). The consideration was arrived at taking into account STA Guangzhou’s current performance, net asset value and growth potential in the fast growing Baiyun International Airport.
Upon completion, which is subject to customary closing conditions, ST Aerospace and Guangdong Airport Authority will each own 44% and 51% stake respectively in STA Guangzhou, while Japan Airlines will become a strategic partner of the joint venture with a 5% stake.
STA Guangzhou, set up in 2014, is an aircraft maintenance, repair and overhaul (MRO) station located within Guangzhou Baiyun International Airport in China. Given Japan Airlines’ strong reputation in quality and standards for both its services and demands placed on MRO providers, the new partnership will facilitate cross-learning and enable STA Guangzhou to enhance its own standing in safety and quality, and be better positioned for greater growth.
This divestment is not expected to have any material impact on the consolidated net tangible assets per share and earnings per share of ST Engineering for the current financial year.